SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C.  20549

                                      FORM 10-K

          (Mark One)

          [X]  ANNUAL  REPORT  PURSUANT  TO  SECTION  13  OR 15(d)  OF  THE
               SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

               For the fiscal year ended December 31, 1995

                                          OR

          [ ]  TRANSITION REPORT  PURSUANT TO  SECTION 13  OR 15(d) OF  THE
                    SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

               For the transition period from           to          

          Commission File
          Number 0-7288

                            INTERCONTINENTAL LIFE CORPORATION              
             (Exact name of registrant as specified in its charter)      

                 New Jersey                     22-1890938                     
          (State of Incorporation)  (I.R.S. Employer identification number)

          701 Brazos, Suite 1400, Austin, Texas                       78701
          (Address of Principal Executive Offices)               (Zip Code)

                                  (512)  404-5050                          
                           (Registrant's Telephone Number)

           Securities Registered pursuant to Section 12(b) of the Act: None

             Securities Registered pursuant to Section 12(g) of the Act:

                            Common Stock, $.22 par value                   
                                   (Title of Class)

          Indicate by check mark  whether the Registrant (1) has  filed all
          reports  required to  be  filed by  Section  13 or  15(d) of  the
          Securities  Exchange Act of  1934 during the  preceding 12 months
          and (2) has been subject to such filing requirements for the past
          90 days.

          YES   X    NO      


          The  aggregate  market value  of the  voting  stock held  by non-
          affiliates  of the  Registrant on  March 20,  1996, based  on the
          closing sales  price in The  Nasdaq Small-Cap Market  ($13.38 per
          share), was $28,102,910. 

          As  of March  20, 1996,  Registrant had  4,181,329 shares  of its
          Common Stock  outstanding (excluding shares held  in Treasury and
          not entitled to vote).

          Indicate  by  check  mark  if  disclosure  of  delinquent  filers
          pursuant  to Item 405 of Regulations S-K is not contained herein,
          and will not be contained, to the best of Registrant's knowledge,
          in  definitive proxy  or information  statements  incorporated by
          reference in Part III of this  Form 10-K or any amendment to this
          Form 10-K. [ ]

                                        PART I

          Item 1. Business

          General

          InterContinental Life  Corporation ("ILCO", the  "Company" or the
          "Registrant")  was incorporated  in 1969  under  the laws  of the
          State of New  Jersey. Its  executive offices are  located at  701
          Brazos, Suite 1400, Austin, Texas 78701.

          The Company is principally  engaged, through its subsidiaries, in
          administering existing  portfolios of  individual and  group life
          insurance,  credit life  and  disability insurance  policies  and
          annuity products.  The Company's insurance subsidiaries  are also
          engaged in the business  of marketing and underwriting individual
          life insurance, credit life  and disability insurance and annuity
          products in 49 states and the District of Columbia. Such products
          are marketed  through independent, non-exclusive  general agents.
          It  also  administers  an   in-force  book  of  health  insurance
          business.

          The Company  is controlled  by  Financial Industries  Corporation
          ("FIC"),  a  life   insurance  holding  company,  through   FIC's
          ownership  of approximately  47%  of  the  Company's  outstanding
          Common  Stock.  FIC  also  holds options  to  acquire  additional
          shares,  which,  if  exercised,  would  result  in  FIC's  owning
          approximately 62% of the  Company's outstanding shares. FIC, ILCO
          and their  insurance  subsidiaries have  substantially  identical
          managements, and a  majority of  the directors of  ILCO are  also
          directors of  FIC and ILCO's and FIC's insurance subsidiaries. No
          non-management  director of the Company  or FIC is  a director of
          the other company. Officers allocate their  time between ILCO and
          FIC  in  accordance with  the  comparative  requirements of  both
          companies  and  their  subsidiaries.   Roy  F.  Mitte,  Chairman,
          President and  Chief Executive  Officer of  FIC, the Company  and
          their insurance subsidiaries, owns  34% of the outstanding shares
          of  FIC's common stock. FIC owns Family Life Insurance Company, a 
          marketer of mortgage protection life insurance based in  Seattle,
          Washington.

          The  Company was  organized  in 1969  to  be the  publicly  owned
          holding  company  for  InterContinental  Life  Insurance  Company
          ("ILIC"). The Company  acquired Standard  Life Insurance  Company
          ("Standard Life")  in 1986,  Investors Life Insurance  Company of
          California  ("Investors-CA") and Investors Life Insurance Company
          of  North  America ("Investors-NA")  in  1988  and Meridian  Life
          Insurance  Company,  now  Investors  Life  Insurance  Company  of
          Indiana ("Investors-IN"), in February 1995.

          Acquisitions

          Strategy.  The Company's strategy has been and continues to be to
          grow internally  and through  acquisitions, while  maintaining an
          emphasis  on  cost  controls.  Management  believes  that,  under
          appropriate  circumstances, it  is more  advantageous to  acquire
          companies  with large books  of in-force  life insurance  than to
          produce  new  business, because  initial underwriting  costs have
          already  been  incurred and  mature  business  is generally  less
          likely to  terminate,  making possible  more  predictable  profit
          analysis.   However,  the  Company's  insurance  subsidiaries  do
          continue to market those products that are profitable, as well as
          develop new  products and  streamline distribution  channels. See
          "Agency  Operations". It  is  also management's  belief that  the
          continuing consolidation in the life  insurance industry presents
          attractive  opportunities  for  the   Company  to  acquire   life
          insurance companies  that complement or fit  within the Company's
          existing  marketing structure  and product  lines. The  Company's
          objective is to improve  the profitability of acquired businesses
          by consolidating and streamlining the administrative functions of
          these   businesses,   eliminating   unprofitable   products   and
          distribution channels, applying  its marketing  expertise to  the
          acquired  company's markets  and  agents,  and  benefitting  from
          economies  of  scale.  The   Company's  ability  to  make  future
          acquisitions  will be dependent on  its being able  to obtain the
          necessary  financing.  In  addition,   since  FIC  has  the  same
          acquisition strategy  as ILCO, a conflict of interest could arise
          in  the future between ILCO  and FIC with  respect to acquisition
          opportunities.

          Acquisition  of  Standard Life.  In  November  1986, the  Company
          acquired  Standard Life,  headquartered in  Jackson, Mississippi,
          for a gross purchase price of $54,500,000. A portion of the funds
          used by the  new life insurance company formed  by the Company to
          make  the acquisition ("New Standard") was the proceeds of a loan
          extended  to  the Company  by a  national  bank in  the principal
          amount of $15,000,000  (the "Standard Term Loan").  This sum was,
          in turn, loaned by the Company to New Standard, and  the loan was
          evidenced by  a surplus debenture.  New Standard was  merged into
          Standard Life in June 1988.

          Acquisition of Investors-NA  and Investors-CA. In  December 1988,
          the Company, through  Standard Life,  purchased Investors-CA  and 
          Investors-NA  from CIGNA  Corporation  for  an adjusted  purchase
          price of $136,000,000.   The Company obtained the funds  used for
          the  acquisition from:  (a)  a  senior  loan  in  the  amount  of
          $125,000,000  provided  by  six  financial  institutions,  (b)  a
          $10,000,000  subordinated  loan  provided  by two  insurance  and
          financial service organizations and (c) the sale of $5,000,000 of
          Class  A  Preferred Stock  to CIGNA  and  $15,000,000 of  Class B
          Preferred  Stock  to   the  subordinated  lenders.  Approximately
          $15,000,000  of these funds  were used to  discharge the Standard
          Term Loan. The balance of these funds  were loaned by the Company
          to Standard  Life. To  evidence this indebtedness,  Standard Life
          issued  a  $140,000,000  surplus  debenture to  the  Company.  In
          connection  with   the  subordinated  debt  and  preferred  stock
          financing,  the Company issued  detachable warrants entitling the
          holders  to purchase  1,107,480  shares of  the Company's  Common
          Stock at $3.33 per share. In May 1990, the holders of the Class A
          and Class B Preferred Stock exchanged that stock for subordinated
          loans of a like amount. The Company prepaid the subordinated debt
          and purchased the warrants in early 1993. See "Refinancing".

          Acquisition of Investors-IN. On  February 14, 1995, ILCO, through
          Investors-NA,  purchased from  Meridian Mutual  Insurance Company
          the   stock    of   Meridian   Life    Insurance   Company,    an
          Indianapolis-based  life insurer,  for a  cash purchase  price of
          $17.1 million.  After the acquisition, Meridian  Life changed its
          name   to   Investors   Life   Insurance   Company   of   Indiana
          ("Investors-IN").

          Investors-IN is licensed in  ten states and markets a  variety of
          individual life and annuity products through independent agents.

          Merger  of  Insurance  Subsidiaries. Investors-NA  redomesticated
          from Pennsylvania to Washington in December of 1992. Investors-CA
          merged into Investors-NA  on December 31, 1992, and Standard Life
          merged  into Investors-NA  on  June 29,  1993.  The mergers  have
          achieved cost savings, such as reduced auditing expenses involved
          in  auditing one  combined company; the  savings of  expenses and
          time resulting  from the combined  company being examined  by one
          state  insurance  department  (Washington),  rather   than  three
          (California, Pennsylvania and Mississippi); the  reduction in the
          number  of tax returns and  other annual filings  with 45 states;
          and  smaller annual fees  to do business  and reduced retaliatory
          premium  taxes in  most  states. Management  believes that  these
          reductions in  expenses have further  strengthened the  financial
          condition of the combined company.

          Operations

          The  Company  has  developed  management  techniques   to  reduce
          operating  expenses  by   centralizing,  standardizing  and  more
          efficiently  performing  many  functions  common  to  most   life
          insurance    companies,   such   as   underwriting   and   policy
          administration,  accounting  and financial  reporting, marketing,
          regulatory  compliance, actuarial services  and asset management. 
          The  Company  has  selectively   recruited  personnel  in  sales,
          marketing and various administrative departments.

          The  Company's  centralized  management  techniques  resulted  in
          significant employee reductions and  expense savings in the three
          life  insurance companies  acquired by  the  Company in  1986 and
          1988.  During  1995,  the   general  insurance  expenses  of  the
          Company's   insurance   subsidiaries   were  $13,737,883,   which
          represented an  increase  from 1994  primarily as  the result  of
          increased marketing expenses incurred by Investors-NA in 1995 and
          ILCO's acquisition  of Investors-IN in  early 1995.   The general
          insurance expenses were $12,865,000  in 1994, $14,170,000 in 1993
          and  $18,182,000 in  1992  (including  nonrecurring  expenses  of
          $2,423,200  incurred  in  connection  with  the  relocation  from
          Philadelphia to  Austin). The  attainment of this  level of  cost
          reduction has contributed significantly to the achievement of the
          current  level  of  profitability.  Management  is  committed  to
          maintaining the  general  insurance  expenses  of  the  Company's
          insurance  subsidiaries  at  a   level  which  will  generate  an
          acceptable   level  of   profitability   while  maintaining   the
          competitive pricing of their insurance products.

          In  June 1991, FIC acquired Family Life, which had 270 employees.
          Following  the  acquisition of  Family  Life  by FIC,  management
          integrated  the  sales,   marketing,  underwriting,   accounting,
          contract and licensing,  investments, personnel, data processing,
          home  office support and other departments of Family Life and the
          life insurance  subsidiaries  of ILCO.  Management believes  this
          integration  has resulted  in cost  savings for  ILCO's insurance
          subsidiaries  and   Family  Life.  During   1992,  the  Company's
          insurance   operations  were   centralized   at   the   Company's
          headquarters  in Austin,  Texas,  with the  exception of  certain
          services performed  in Seattle,  Washington (some of  the premium
          accounting services were moved to Seattle in the first quarter of
          1993).   Management   believes  that   relocating  administrative
          functions to Austin has reduced costs and improved the efficiency
          of the  insurance companies' operations. The  number of employees
          within the Company and  its subsidiaries (including employees who
          also   perform  administrative  services  for  Family  Life)  was
          approximately 330 at December 31, 1995.

          Principal Products

          The  Company's insurance  subsidiaries  are engaged  primarily in
          administering existing  portfolios of  individual and  group life
          insurance and accident and  health insurance policies and annuity
          products. Approximately 73.9% of the total collected premiums for
          1995 were  derived primarily  from renewal premiums  on insurance
          policies and annuity products  sold by the insurance subsidiaries
          prior to their acquisition by the Company.

          The  Company's   insurance  subsidiaries  are  also   engaged  in
          marketing  and underwriting individual life insurance and annuity
          products  in  49  states  and  the  District of  Columbia.  These 
          products  are marketed through independent, non-exclusive general
          agents. In  1992, Standard Life discontinued  its group insurance
          marketing  and transferred  its  in-force group  insurance to  an
          unrelated insurance company.

          The products currently being distributed include several versions
          of universal  life  insurance and  interest-sensitive whole  life
          insurance. Under a whole  life insurance policy, the policyholder
          pays  a  level premium  over his  or  her expected  lifetime. The
          policy  combines life  insurance protection  with a  savings plan
          that  gradually increases  in  amount over  a  period of  several
          years. The universal and interest-sensitive  whole life insurance
          policies   of  the   Company's  insurance   subsidiaries  provide
          permanent life insurance with adjustable rates of return based on
          current interest rates and  mortality  assumptions. The universal
          life insurance portfolio of the  Company's insurance subsidiaries
          consists primarily  of  flexible premium universal life insurance
          policies.

          Under the  flexible premium policies, policyholders  may vary the
          amounts of their coverage (subject to minimum and maximum limits)
          as well as the date of payment and frequency of payments.  

          Direct  premiums  received  from  all  types  of  universal  life
          products were $42.3 million in 1995, as compared to $42.1 million
          in 1994 and $46.8 million in 1993.  In 1995,  premium income from
          all  life insurance products was derived from all states in which
          the  Company's   insurance   subsidiaries  are   licensed,   with
          significant amounts derived  from Pennsylvania (14%),  California
          (9%) New Jersey (8%).

          Until  they  discontinued sales  of  credit  life and  disability
          insurance in the  fourth quarter  of 1994, two  of the  Company's
          insurance subsidiaries generally sold that insurance to consumers
          through  lending  and  credit organizations.  Such  insurance was
          generally  written on an individual or group basis to (i) persons
          financing the purchase  of new  automobiles in the  State of  New
          Jersey and (ii)  persons obtaining loans  from banks and  finance
          companies in southeastern states. Most policies of this type were
          issued for a term of 48 months or less.

          Direct premiums received from credit life and accident insurance,
          prior  to reinsurance, were $4.2 million in 1994 and $6.5 million
          in 1993. 

          Two  of  the  Company's insurance  subsidiaries  receive  premium
          income from  health insurance  policies. In 1995,  premium income
          from all  health insurance policies was $1.1 million, as compared
          to $1.4 million in 1994 and  $1.9 million in 1993. Premium income
          from health insurance in 1995 was derived from  all of the states
          in  which those  two  insurance subsidiaries  are licensed,  with
          significant amounts  derived from Pennsylvania  (21%), New Jersey
          (21%), and California (9%).

          Investors-NA sponsors a variable annuity  separate account, which 
          offers  single  premium  and  flexible  premium  policies.    The
          policies  provide  for the  contract  owner  to allocate  premium
          payments  among  four  different  portfolios  of  Putnam  Capital
          Manager Trust ("PCM  Fund"), a  series fund which  is managed  by
          Putnam Investment  Management, Inc.   Prior to  April, 1995,  the
          underlying investment  vehicle for the variable annuity contracts
          was the  CIGNA Annuity Funds  Group.  A  substitution of the  PCM
          Fund for the CIGNA Funds was  completed in April, 1995.  The plan
          of  substitution  was approved  by  the  Securities and  Exchange
          Commission.   Following such approval, the plan  was submitted to
          policyholders for  approval, which   was obtained.   During 1995,
          the  premium income  realized in  connection with  these variable
          annuity policies  was $376,000, which was  received from existing
          contract owners.

          Direct  deposits from  the sale  of fixed  annuity  products were
          $1,359,000  in  1995,  as  compared to  $1,296,000  in  1994  and
          $1,695,000 in 1993.

          The  following table  sets  forth,  for  the  three  years  ended
          December  31,  1995,  the   combined  premium  income  and  other
          considerations received by  the Company's insurance  subsidiaries
          from sales of their various lines of insurance.

                                             Year Ended December 31,
          Type of Insurance            1995          1994         1993
                                                (in thousands)
          Individual:                               

          Life                           $16,426    $15,721    $16,196
          Accident & Health                1,218      1,435      1,504
            Total Individual Lines        17,644     17,156     17,700 

          Group:

          Life                             2,594      2,226      3,195

          Accident & Health                    6        105        275
            Total Group Lines              2,600      2,331      3,470

          Credit:

          Life                              (222)     3,282      4,354
          Accident & Health                  240      2,296      2,468
            Total Credit Lines                18      5,578      6,822

          Total Premiums                  20,262     25,065     27,992
          Reinsurance premiums ceded      (8,568)   (10,748)   (11,878)

               Total Net Premium          11,694     14,317     16,114

          Amount Received on
          Investment
          Type Contracts                  44,130     43,372     47,733 

               Total Premiums and                               
               Deposits Received         $55,824    $57,689    $63,847
                                                               
          Investment of Assets

          The  assets held  by  the Company's  insurance subsidiaries  must
          comply  with  applicable  state insurance  laws  and  regulations
          pertaining to life insurance companies. The investment  portfolio
          of the  Company's insurance  subsidiaries is tailored  to reflect
          the  nature  of   the  insurance  obligations,   business  needs,
          regulatory requirements and  tax considerations  relating to  the
          underlying insurance  business with respect to  such assets. This
          is particularly the case  with respect to interest-sensitive life
          insurance  and deferred  annuity products,  where the  investment
          emphasis is to obtain a  targeted margin of profit over the  rate
          of  interest  credited  to policyholders,  while  endeavoring  to
          minimize the portfolio's exposure  to changing interest rates. To
          reduce the  exposure to such rate  changes, portfolio investments
          are selected  so that  diversity, maturity and  liquidity factors
          approximate the duration of associated policyholder liabilities.

          The investment objective of the Company's insurance  subsidiaries
          emphasizes the  selection of  short to medium  term high  quality
          fixed income securities, rated Baa-3 (investment grade) or better
          by Moody's  Investors Service,  Inc. At  December 31,  1995, only
          5.1% of  the  Company's total  assets were  invested in  mortgage
          loans  or real estate.  Non-affiliated corporate  debt securities
          that were non-investment grade  represented 1.1% of the Company's
          total assets at December 31, 1995. The Company had investments in
          debt   securities   of  affiliated   corporations     aggregating
          approximately $61.2 million as of December 31, 1995.

          Investments in mortgage-backed securities included collateralized
          mortgage obligations ("CMOs") of $280,286,000 and mortgage-backed
          pass-through  securities of  $65,810,000  at  December 31,  1995.
          Mortgage-backed pass-through securities, sequential CMOs, support
          bonds, and  z-accrual bonds, which comprised  approximately 57.1%
          of the book value of  the Company's mortgage-backed securities at
          December  31, 1995,  are  sensitive to  prepayment and  extension
          risks. The Company has reduced the risk of  prepayment associated
          with  mortgage-backed   securities   by  investing   in   planned
          amortization  class  ("PAC"), target  amortization  class ("TAC")
          instruments, accretion directed bonds and scheduled bonds.  These
          investments are designed to amortize  in a predictable manner  by
          shifting the  risk of prepayment of the  underlying collateral to
          other investors in other tranches ("support classes") of the CMO.
          PAC  and TAC  instruments  and accretion  directed and  scheduled
          bonds represented approximately 42.9% and sequential  and support
          classes represented approximately 34.4% of the book value  of the
          Company's  mortgagebacked securities  at  December 31,  1995.  In
          addition,  the Company limits the  risk of prepayment  of CMOs by
          not paying a premium for any CMOs. The Company does not invest in
          mortgage-backed  securities with increased  prepayment risk, such 
          as  interest-only  stripped pass-through  securities  and inverse
          floater bonds.  The Company does  invest in z-accrual  bonds, but
          they constituted only  3.6% of  the book value  of the  Company's
          mortgage-backed securities at  December 31, 1995.  The prepayment
          risk that  certain mortgage-backed  securities are subject  to is
          prevalent in periods of  declining interest rates, when mortgages
          may  be  repaid  more   rapidly  than  scheduled  as  individuals
          refinance higher  rate mortgages to  take advantage of  the lower
          current rates. As a result, holders of mortgage-backed securities
          may receive  large prepayments on their  investments which cannot
          be  reinvested at an interest rate  comparable to the rate on the
          prepaying mortgages.  The Company  does not invest  in non-agency
          mortgage-backed securities, which have a greater credit risk than
          that of agency mortgage-backed securities.

          The Company  does  not  make new  mortgage  loans  on  commercial
          properties.  Substantially all  of the  Company's mortgage  loans
          were made by its  subsidiaries prior to their acquisition  by the
          Company. At December  31, 1995, 1.7% of  the total book  value of
          mortgage  loans held by the Company had defaulted as to principal
          or interest for  more than  90 days,  and none  of the  Company's
          mortgage  loans  were in  foreclosure. During  1995, none  of the
          Company's mortgage loans were converted to foreclosed real estate
          or were restructured while the Company owned them.

          Another key  element of the  Company's investment strategy  is to
          avoid  large exposure  in other  investment categories  which the
          Company   believes  carry  higher   credit  or  liquidity  risks,
          including    private    placements,    partnerships   and    bank
          participation. These categories accounted for  approximately 2.2%
          of the Company's invested assets at December 31, 1995.

          The Company has established and staffed an investment department,
          which  manages  portfolio investments  and  investment accounting
          functions for ILCO's life insurance subsidiaries.

          Agency Operations

          ILCO's insurance  subsidiaries  collectively market  through  the
          "Investors"   distribution   system.  Independent   non-exclusive
          agents, general  agents and brokers are  recruited nation-wide to
          sell  the products. Such  agents and brokers  also sell insurance
          products  for  companies  in competition  with  ILCO's  insurance
          subsidiaries.  In order to attract agents and enhance the sale of
          its   products,   the   Company's   insurance   subsidiaries  pay
          competitive   commission   rates   and   provides   other   sales
          inducements. The Investors Sales distribution system is presently
          concentrating its efforts on the  promotion and sale of universal
          life, interest-sensitive life and term products.  A new interest-
          sensitive  whole life  product was  introduced to  complement the
          Company's life portfolio.

          In 1995, the Company continued  recruitment of general agents and
          repositioned  the  VIP   Gold  recruiting  program.     Investors 
          continued to pursue select risk marketing and expanded efforts to
          rebuild and increase production in traditional markets.

          Marketing  and   sales  for   all  of  the   Company's  insurance
          subsidiaries  are directed  by  the Executive  Vice President  of
          Marketing  and Sales.   The  Vice  President for  Investors Sales
          directs  Regional Vice  Presidents  who are  responsible for  the
          recruitment and  maintenance of  the general agents  and managing
          general agents for individual insurance sales.

          Data Processing

          Pursuant  to  a data  processing agreement  with a  major service
          company, the data processing needs of ILCO's and  FIC's insurance
          subsidiaries were  provided at a central  location until November
          30,  1994.  Effective   December  1,  1994,  all  of  those  data
          processing needs have  been provided to ILCO's  and FIC's Austin,
          Texas  and  Seattle,   Washington  facilities  by   FIC  Computer
          Services,  Inc., a new subsidiary  of FIC. See  Item 13.- Certain
          Relationships and Related Transactions with Management.

          Competition

          There  are many life and health insurance companies in the United
          States. A  significant number  of casualty companies  also market
          health insurance. Agents  placing insurance business with  ILCO's
          life  insurance subsidiaries  are  compensated  on  a  commission
          basis. However, some companies  pay higher commissions and charge
          lower  premium rates  and  many companies  have more  substantial
          resources.

          The  principal  cost  and  competitive factors  that  affect  the
          Company's ability  to  sell its  life  and health  insurance  and
          annuity products on a profitable basis are: (1) the general level
          of  premium rates  for  comparable products;  (2)  the extent  of
          individual  policy  holder  services  required  to  service  each
          product  category;   (3)  general  interest   rate  levels;   (4)
          competitive  commission rates  and related  marketing costs;  (5)
          legislative and regulatory requirements and restrictions; (6) the
          impact of  competing insurance and other  financial products; and
          (7) the condition of the regional and national economies.

          Reinsurance and Reserves

          In accordance  with general practices in  the insurance industry,
          the Company's insurance subsidiaries limit the maximum net losses
          that  may  arise  from  large  risks  by  reinsuring  with  other
          carriers.  Such  reinsurance  provides   for  a  portion  of  the
          mortality risk to be  retained (the "Retention") with  the excess
          being ceded to  a reinsurer at a premium set  forth in a schedule
          based  upon the age and  risk classification of  the insured. The
          reinsurance  treaties  provide  for   allowances  that  help  the
          Company's  insurance subsidiaries  offset the expense  of writing
          new business. ILIC generally retains the first $70,000 of risk on 
          the  life  of  any  individual.  On  group  life  insurance,  the
          retention  level is  $50,000  per individual  life.  Investors-NA
          generally  retains the first $100,000 of risk  on the life of any
          individual. Investors-IN generally  retains the first  $50,000 of
          risk on the life of any individual.  

          In  1988, Investors-NA  entered  into a  bulk reinsurance  treaty
          under  which it reinsured all of its risks under accidental death
          benefit  policies.  ILIC  had  previously  obtained  similar bulk
          reinsurance for accidental death benefit policies. The treaty was
          renegotiated with another reinsurer, with a new effective date of
          January 1, 1996.  

          In  1993 ILCO's  life  subsidiaries entered  into  a quota  share
          reinsurance  treaty  under  which  all  credit  life  and  health
          business issued March 1, 1993 and later is 50% reinsured. 

          In 1995,  Investors-NA entered into a  reinsurance agreement with
          Family  Life pertaining  to universal  life insurance  written by
          Family Life.   The  reinsurance agreement  is  on a  co-insurance
          basis and applies to all covered business with effective dates on
          and after  January 1, 1995.   The agreement applies  to only that
          portion  of the  face amount  of  the policy  which is  less than
          $200,000; face  amounts  of $200,000  or  more are  reinsured  by
          Family Life  with  a  third party  reinsurer.    The  arrangement
          reflects management's plan to  develop universal life business at
          Investors-NA, with  Family Life  concentrating on the  writing of
          term life insurance products. 

          Although  reinsurance  does not  eliminate  the  exposure of  the
          Company's insurance  subsidiaries to  losses from  risks insured,
          the net liability  of such  subsidiaries will be  limited to  the
          portion of the  risk retained, provided that the  reinsurers meet
          their contractual obligations.

          The  Company's insurance  subsidiaries  carry  reserves on  their
          books  to   meet  future  obligations   under  their  outstanding
          insurance policies.  Such reserves are believed  to be sufficient
          to  meet policy  obligations as  they mature  and are  calculated
          using   assumptions   for  interest,   mortality,   expenses  and
          withdrawals in effect at the time the policies were issued.

          FIC's Acquisition of Control of the Company

          In  January 1985, FIC acquired 26.53% of ILCO's common stock. FIC
          and Family Life subsequently acquired additional shares of ILCO's
          common stock and as  of March 20, 1996,  FIC owned, directly  and
          indirectly through Family Life,  47.03% of the outstanding shares
          of  ILCO's common  stock.  FIC holds  options  to acquire  up  to
          1,702,155 additional  shares of ILCO Common  Stock. Giving effect
          to the exercise  of those  options, FIC would  own, directly  and
          indirectly through Family Life,  62.35% of the outstanding shares
          of ILCO Common Stock. The exercise  price of the options is equal
          to  the average quoted market  price of ILCO's  common stock over 
          the six month period immediately prior to exercise. In  addition,
          in the  event that  any  other party  were  to seek  to  acquire,
          without  the  prior  approval   of  ILCO's  Board  of  Directors,
          securities aggregating five percent or more of ILCO's outstanding
          common stock, FIC would have the right to acquire, under the same
          price formula,  that  number of  shares  of ILCO's  common  stock
          which,  when added  to the  number of shares  then owned  by FIC,
          would amount to 51% of ILCO's outstanding common stock.

          The stock options  were granted  in 1986  to FIC  by the  Company
          principally in consideration for a $1,200,000 unsecured loan from
          FIC,   FIC's  agreement   to  guarantee   up  to   $4,000,000  of
          Registrant's  financial  obligations   and  FIC's  agreement   to
          guarantee, upon demand, ILCO's performance under its lease on its
          headquarters building. In addition,  FIC guaranteed a $15,000,000
          term loan of ILCO.

          FIC's Acquisition of Family Life

          After FIC  acquired control of ILCO, FIC's primary involvement in
          the insurance industry was its indirect investment, through ILCO,
          in  ILCO's insurance  subsidiaries.  In June  1991, FIC  acquired
          Family Life Insurance Company, ("Family Life"), based in Seattle,
          Washington, from Merrill Lynch Insurance Group, Inc.

          Family  Life  underwrites  and  sells  mortgage  protection  life
          insurance to customers who  are mortgage borrowers from financial
          institutions  where  Family  Life  has  marketing  relationships.
          Family Life distributes its  insurance products primarily through
          a national career  sales force in 49  states and the  District of
          Columbia.

          The $114 million purchase price for Family Life and an additional
          $5  million  for transaction  costs,  working  capital and  other
          related  purposes were financed by: (a) a $50 million senior loan
          provided  by a group of banks, (b) $44 million subordinated notes
          issued  to  the seller  and its  affiliates  and (c)  $25 million
          senior   subordinated   notes    issued   to   Investors-CA   and
          Investors-NA.  In  addition,  FIC  granted  to  Investors-CA  and
          Investors-NA nontransferable options to purchase up to a total of
          9.9%  of FIC's  common stock  at  a price  of  $10.50 per  share,
          equivalent  to   the  then  current  market   price,  subject  to
          adjustment  to prevent dilution. The  options will expire on June
          12,  1998  if   not  previously  exercised.  In   July  1993  the
          subordinated  notes held by  the seller  and its  affiliates were
          prepaid.  The  primary source  of the  funds  used to  prepay the
          subordinated debt  was a new  subordinated loan of  $34.5 million
          obtained from  Investors-NA. See  Item 13. Certain  Relationships
          and Related Transactions with Management.

          Senior Loan, Subordinated Loans and Warrants

          The  Company  obtained the  funds  used  for the  acquisition  of
          Investors-CA and  Investors-NA from the following  sources: (1) a 
          credit  facility in  the amount of  $135,000,000 composed  of the
          following: (a) a senior  loan in the amount of  $125,000,000 (the
          "Senior  Loan")  provided  by   a  nationally  chartered  banking
          institution (the "Senior Lender")  as the lead bank in  a lending
          syndicate  consisting  of   six  banks  and/or  other   financial
          institutions;  and  (b)  a  $10,000,000  subordinated  loan  (the
          "Subordinated Loan")  provided  by two  insurance  and  financial
          service organizations  (the "Subordinated Lenders"); and  (2) the
          sale of preferred  stock as  follows: (a) $5,000,000  of Class  A
          Preferred  stock  issued at  par  to Insurance  Company  of North
          America,  a CIGNA  subsidiary;  and (b)  $15,000,000  of Class  B
          Preferred Stock issued at par to the Subordinated Lenders. In May
          1990, the  holders of  the Class  A and Class  B Preferred  Stock
          exchanged such stock for subordinated loans of a like amount (see
          "Exchange  of  Preferred  Stock").  Approximately  $15,000,000 of
          these funds were  used to  discharge an existing  term loan.  The
          balance  of  these  funds were  loaned  by  ILCO  to Standard  to
          consummate the  purchase  under  the  Acquisition  Agreement.  To
          evidence   this  indebtedness,  Standard  issued  a  $140,000,000
          surplus debenture  to ILCO. The Company  prepaid the Subordinated
          Loans  and  amended its  Senior Loan  in  January 1993.  See "The
          Refinancing."

          Senior Loan. The Senior  Loan was a secured and  guaranteed eight
          year term loan in the aggregate principal amount of $125,000,000.
          The Senior  Loan had a  maturity date  of December 31,  1996. The
          principal was payable in  twenty-seven quarterly installments  of
          $4,000,000  each, commencing  on July 1,  1989, followed  by four
          quarterly installments  of $4,250,000 each. The  interest rate of
          the  Senior  Loan  was  subject to  periodic  change  based  upon
          stipulated percentages above a  quoted bank base lending  rate or
          Eurodollar rate as such are in effect from time to time.

          The obligations of  the Registrant and its subsidiaries under the
          Senior Loan  documents were secured by: (1) all of the issued and
          outstanding shares of stock of Standard and each other subsidiary
          now  or  hereafter  directly  owned  by  the  Registrant,  (2) an
          existing $15,000,000  surplus debenture  assumed by  Standard and
          payable  to the  Registrant, which  had an  outstanding principal
          balance  of $6,956,224  as  of  December  31,  1995,  and  (3)  a
          $140,000,000  surplus  debenture  issued   by  Standard  to   the
          Registrant  in  connection with  the  transaction,  which had  an
          outstanding principal  balance of $62,340,000 as  of December 31,
          1995.  The  obligations of  the  Company  under the  Senior  Loan
          documents were guaranteed by FIC.  FIC owns approximately 47%  of
          the Company's issued and outstanding common stock.

          The Senior Loan documents specified events of default, including,
          but not limited to,  failure to pay amounts payable  with respect
          to the  Senior Loan documents  when due,  violation of  covenants
          included in  the Senior Loan documents  (including covenants with
          respect  to the  maintenance of  a minimum  net  worth), material
          misrepresentations, defaults  under other indebtedness,  the loss
          of any license of an insurance subsidiary of the Registrant which 
          would have a material adverse effect on the Registrant,  defaults
          under the FIC guaranty agreement, changes in ownership or control
          of FIC or the Company by its controlling person, Roy F. Mitte, or
          in the  Company by FIC  and the  occurrence of certain  events of
          bankruptcy.  If Mr. Mitte had ceased to control the management of
          the  Company  solely by  reason  of (i)  his  death  or (ii)  his
          permanent inability to  perform his usual and customary duties on
          a full-time basis on behalf of  the Company and FIC as the result
          of physical or mental infirmity,  a default would have  occurred,
          and the  banks holding in the  aggregate at least 66  2/3% of the
          outstanding  balance of the Senior Loan would have had the right,
          on  or after 180  days after the  date on which  such default had
          occurred, to declare the Senior Loan immediately due and payable.

          The  Senior  Loan  documents  also  contained  various  specified
          negative, affirmative and financial  covenants to be performed or
          observed by the Registrant and its subsidiaries.

          In July 1990,  the Company made an advance payment of the October
          1990  and January  1991  installments of  the principal  payments
          under the Senior Loan. This advance payment  was in the amount of
          $8 million  and resulted in  a savings in  interest costs  to the
          Company  of approximately $334,250. In May  1991 the Company made
          another advance payment.  This advance payment, in the  amount of
          $12 million, prepaid the July 1991, October 1991 and January 1992
          installments  of principal  and resulted  in savings  in interest
          costs to the Company of approximately $398,000.  The Company made
          a  payment of  $21 million on  April 1,  1992, which  reduced the
          Senior Loan's  outstanding principal  balance to $60  million. Of
          that $21 million  payment, $4,642,853 was required  by the Senior
          Loan documents to be paid as a result of ILCO  having Excess Cash
          Flow (as defined in  the Senior Loan documents) in 1991,  and $16
          million prepaid  the installments  of principal through  April 1,
          1993.

          The   Senior  Loan  was   amended  in  January   1993.  See  "The
          Refinancing."

          Subordinated Loan.  The original amount of  the Subordinated Loan
          was  $10,000,000,  for a  term of  nine  years (the  "1997 Series
          Subordinate Notes"). As a result of the exchange of the Company's
          Class  A  Preferred  Stock  and  Class  B  Preferred  Stock  (see
          "Preferred Stock"),  the Subordinated  Loan consisted of  (i) the
          1997  Series  Subordinated  Notes,  in the  principal  amount  of
          $10,000,000,  (ii) the  1998  Series Subordinated  Notes, in  the
          principal amount  of $5,000,000, plus a make-whole  amount due at
          maturity equal to 13.25%  of the then outstanding balance  of the
          loan  and  (iii)  the  1999 Series  Subordinated  Notes,  in  the
          principal  amount  of  $15,000,000.  The  interest  rate  on  the
          Subordinated Loan was 13.25% per annum payable quarterly.  In the
          event of  default,  the interest  rate  would have  increased  to
          15.25%  per  annum. Registrant  was  allowed to  prepay  the 1998
          Series Subordinated Notes, in whole or  in part, at any time, and
          the 1997 and 1999 Series Subordinated Notes, in whole or in part, 
          after  the third anniversary  of the loan  in 1991, subject  to a
          make-whole premium  payment intended to  provide the Subordinated
          Lenders  with  an  economic   return  on  the  Subordinated  Loan
          approximately equal to that which they would have received if the
          loan was paid at maturity. The Subordinated Loan was subordinated
          to the $125,000,000 Senior Loan described above and constituted a
          second lien on all assets subject to the first lien of the Senior
          Loan. Repayment of  the Subordinated Loan was  also guaranteed by
          FIC.

          Pursuant  to the terms of  the Subordinated Loan,  the holders of
          the  1997   Series  Subordinated   Notes  and  the   1999  Series
          Subordinated Notes  were issued detachable warrants entitling the
          holders  to purchase 19.95% of the Registrant's Common Stock on a
          fully diluted basis  exercisable for a Warrant Exercise  Price of
          $10.00  per share. As a  result of the  three-for-one stock split
          effective  February  15, 1990,  the  Warrant  Exercise Price  was
          adjusted  to $3.33 per share. The warrants provided for a put and
          call  option  under which  the holder  was  entitled to  put said
          warrants  to the Registrant at a specified price during the sixth
          through  eighth years (which was subject to being extended due to
          any postponement periods imposed by a Senior Debt default) of the
          Subordinated Loan and the  Registrant had the right to  call said
          warrants  commencing at  the beginning  of  the seventh  year and
          continuing  thereafter  for a  similar  three  year period.  (see
          "Warrants").

          The Subordinated  Loan  documents specified  events  of  default,
          including,  but  not  limited   to,  failure  to  pay  principal,
          interest, commitment  fees or other amounts  payable with respect
          to  the  Subordinated  Loan  documents  when  due,  violation  of
          covenants  included in the Subordinated Loan Documents (including
          covenants  with respect to the maintenance of a minimum net worth
          of  $22,500,000),  material  misrepresentations,  defaults  under
          other indebtedness, changes in ownership or control of FIC by its
          controlling  person, Roy F. Mitte,  or in the  Registrant by FIC,
          and the occurrence of certain events of bankruptcy.

          The  Subordinated Loan  was  prepaid in  January  1993. See  "The
          Refinancing."

          Preferred Stock. In 1988,  the shareholders approved an amendment
          to the  Company's Certificate  of Incorporation to  authorize the
          issuance of  5,000,000 shares of  Class A Preferred  Stock, $1.00
          par  value, 15,000,000 shares  of Class B  Preferred Stock, $1.00
          par value and 10,000,000 shares of Class C Preferred Stock, $1.00
          par value.  In connection with  the acquisition of  the Investors
          Life  Companies,  the Registrant  sold  5,000,000  shares of  the
          Registrant's Class A Preferred  Stock to Investors Life Insurance
          Company  of North America for  a total sales  price of $5,000,000
          and  sold 15,000,000 shares of the Registrant's Class B Preferred
          Stock  to the  Subordinated Lenders  and their  affiliates  for a
          total sales price of  $15,000,000. Under the Senior Loan  and the
          New  Senior Loan (see  "The Refinancing"), the  Registrant is not 
          permitted to issue the Class C Preferred Stock.

          Exchange of Preferred  Stock. Effective  as of May  1, 1990,  the
          Company effected an  exchange agreement with  the holders of  its
          Class A Preferred Stock (principal amount of $5 million; dividend
          rate of 13.25%) and its Class B Preferred Stock (principal amount
          of $15 million; dividend rate of 13.25%). Under the provisions of
          the  exchange agreement,  the holders  of the  Class A  Preferred
          Stock received  $5  million principal  amount  of a  13.25%  1998
          Series Subordinate  Notes, due November 1, 1998,  together with a
          make whole amount equal to 13.25% of the then outstanding balance
          of the Note. The holders of the Class B Preferred Stock  received
          $15 million principal amount of a 13.25% 1999 Series Subordinated
          Notes,   due  November  1,  1999.  Each  of  the  new  Series  of
          Subordinated  Notes  were  included,  by  amendment,  within  the
          Subordinated Loan  documents described in  the preceding  section
          (see "Subordinated Loan").

          As a  result of this transaction, the  Company's interest expense
          increased by  approximately $1.7 million  in 1990 as  compared to
          1989 and  increased by $ 2.7 million in 1991 as compared to 1989,
          and  net income available to common shareholders in 1990 and 1991
          increased by  the  tax  effect  of these  increases  in  interest
          expense.

          Warrants. In  connection with the Subordinated  Loan and issuance
          of  the  Class B  Preferred Stock  the  Registrant issued  to the
          holders of the 1997 Series Subordinated Notes and the  purchasers
          of  the Class B Preferred  Stock on December  28, 1988 detachable
          warrants  entitling the  warrant  holders thereof  to purchase  a
          total  of 1,107,480 shares of the Registrant's Common Stock, on a
          fully diluted basis, exercisable at $3.33 per share. The warrants
          carried a put and call option under which the holder was entitled
          to  put  said warrants  to  the Company  at  a price  based  on a
          specified formula  during the period commencing  at the beginning
          of the sixth year  from the date of  issuance and continuing  for
          1,095  days thereafter, except that to the extent that the Senior
          Loan  would have prevented the  exercise of such  put, they could
          have  been exercised  for such  additional period  as would  have
          given  the  warrant holders  1,095 days  of exercise  rights. The
          Company had  the right  to call said  warrants for a  like period
          commencing at the beginning of the  seventh year from the date of
          issuance.  The  warrants  were  purchased and  cancelled  by  the
          Company in January 1993. See "The Refinancing."

          The  Refinancing. On January 29, 1993, the Company prepaid all of
          its subordinated indebtedness and  purchased and cancelled all of
          the warrants held by certain  of its subordinated noteholders. In
          addition to paying the $30 million  aggregate principal amount of
          the  subordinated notes due in  1997, 1998 and  1999 plus accrued
          interest, the Company paid approximately $7 million of prepayment
          penalty,  the  after-tax effect  of  which was  a  charge against
          earnings in 1993, and approximately  $8 million for the warrants,
          which  was  a  charge  directly against  retained  earnings.  The 
          warrants had entitled the holders to purchase 1,107,480 shares of
          the Company's Common Stock  (approximately 24% of the outstanding
          shares)  at an exercise price  of $3.33 per  share. The currently
          estimated price that the warrant holders  could have required the
          Company to pay for the warrants upon exercise of their put option
          was approximately $29.9 million. The earliest that the put option
          could have  been exercised  was December  1993, if such  exercise
          would not  have resulted  in a default  under the Senior  Loan at
          that  time. The purchase  and cancellation  of the  warrants will
          reduce the  number of the Company's outstanding  shares of common
          stock and common stock equivalents used in the computation of its
          earnings  per  share  from  approximately   7,147,000  shares  to
          approximately 6,040,000 shares. This  adjustment in common  stock
          equivalents  has affected  earnings per  share for  periods after
          January 29, 1993.

          The primary source of  the funds used to prepay  the subordinated
          debt  and to  purchase  the  warrants  was  an  increase  in  the
          outstanding balance of the  Senior Loan from $60 million  to $110
          million pursuant to an amended and restated credit agreement that
          the  Company entered into on January 29, 1993 with certain banks,
          including the same agent  bank as in the Company's  original bank
          group  in 1988.  The Company's  prepayment of  subordinated debt,
          purchase of warrants and increase in senior bank indebtedness are
          referred to herein as the "Refinancing". The terms of the amended
          and   restated   credit   facility   ("New  Senior   Loan")   are
          substantially the same as  the Senior Loan. The interest  rate on
          the  $30 million subordinated debt  that was replaced  by the New
          Senior Loan was  13.25%. The  average interest rate  paid by  the
          Company on  its New  Senior Loan  was approximately  6.37% during
          1993, 7.04% during 1994 and 8.63% during 1995. The maturity date,
          which had been  December 31, 1996, was  extended to July 1,  1998
          for  the New  Senior  Loan. On  February  14, 1995,  the  Company
          borrowed an additional $15  million under the New Senior  Loan to
          help finance  the acquisition  of Investors-IN, and  the maturity
          date of the New Senior Loan was further extended to July 1, 1999.

          The New Senior Loan is a secured and  guaranteed six and one-half
          year term loan. A required $26 million principal payment was made
          on  April 1, 1993. Thereafter, the principal is payable in twenty
          two quarterly  installments of  $4.5 million each,  commencing on
          April 1, 1994 and ending on July 1, 1999. The Company is required
          to make mandatory  payments on the New  Senior Loan equal to  (a)
          100%  of  the net  proceeds from  the  issuance of  the Company's
          capital  stock   or  debt  securities  and   (b)  the  applicable
          percentage of the Company's annual Excess Cash Flow: 100%, if the
          outstanding principal  balance of the New Senior Loan exceeds $75
          million; 75%, if the outstanding  balance exceeds $50 million but
          is equal to or less than $75 million; or 50%,  if the outstanding
          balance is equal to or less than $50 million. Excess Cash Flow is
          the  excess  of  (i) the  sum  of  the  Company's cash  and  cash
          equivalents, principal and interest  received by the Company from
          surplus debentures,  cash dividends  received by the  Company and
          interest income on the Company's  cash equivalents over (ii)  the 
          sum of principal and interest paid on the Company's indebtedness,
          operating expenses, taxes actually paid and $5 million.

          The New Senior Loan bears interest, at the option of the Company,
          at a  rate per  annum equal  to (i) the  Alternate Base  Rate (as
          defined  below) plus the Applicable Margin (as defined below), or
          (ii)  LIBOR (adjusted for reserves) for interest periods of 1, 2,
          3  or  6  months plus  the  Applicable  Margin.  LIBOR is  London
          Inter-Bank  Offered Rates. The Alternate Base Rate for any day is
          the  higher  of  (a) the  agent  bank's  corporate  base rate  as
          announced from  time to time  and (b) the  federal funds  rate as
          published by the Federal Reserve Bank of New York plus 0.5%.  The
          Applicable Margin, depending on the outstanding principal balance
          of the New Senior Loan, ranges  from 0.5% to 1.25% for loans that
          bear interest based upon  the Alternate Base Rate and  from 1.75%
          to  2.5% for  loans  that bear  interest  based upon  LIBOR.  The
          initial Applicable Margin for Alternate  Base Rate loans is 1.25%
          and the initial Applicable Margin for LIBOR loans is 2.5%.

          The  obligations of  the Company  under the  New Senior  Loan are
          secured  by:  (1)  all of  the  outstanding  shares  of stock  of
          Investors-NA, (2) a $15,000,000 surplus debenture of Investors-NA
          payable  to  the  Company,  which had  an  outstanding  principal
          balance  of  $6,956,224  as  of  December  31,  1995  and  (3)  a
          $140,000,000 surplus  debenture of  Investors-NA  payable to  the
          Company,   which   had  an   outstanding  principal   balance  of
          $62,340,000 as  of  December 31,  1995.  The obligations  of  the
          Company under the New Senior Loan are guaranteed by FIC.

          The New Senior  Loan prohibits the payment by the Company of cash
          dividends on  the Common Stock and  contains covenants, including
          restrictive  covenants that  impose limitations on  the Company's
          and  its subsidiaries' ability  to, among other  things: (i) make
          investments; (ii)  create or incur additional  debt; (iii) engage
          in businesses  other than  their present and  related businesses;
          (iv)  create  or incur  additional  liens;  (v) incur  contingent
          obligations;   (vi)  dispose   of   assets,  (vii)   enter   into
          transactions with  affiliated companies; and (viii)  make capital
          expenditures;   and    various   financial  covenants,  including
          covenants  requiring  the  maintenance  of a  minimum  cash  flow
          coverage  ratio,  minimum  consolidated  net  worth  and  minimum
          statutory  surplus of subsidiaries, and a minimum ratio (330%) of
          the sum of statutory capital and surplus, asset valuation reserve
          and  interest  maintenance  reserve  of  each  insurance  company
          subsidiary to  its respective  Authorized Control Level  RBC (see
          "Regulation").

          The New Senior  Loan specifies events of  default, including, but
          not limited to, failure to pay amounts under  the New Senior Loan
          documents  when due;  defaults  or violation  of covenants  under
          other  indebtedness; certain  defaults  or violation  of  certain
          covenants under the  Family Life senior bank loan; defaults under
          the $34.5  million loan made  by Investors-NA to  subsidiaries of
          FIC in 1993; the  loss of any license of an  insurance subsidiary 
          of the Company which would have a material adverse effect on  the
          Company; defaults  under the  FIC guaranty agreement;  changes in
          ownership or control  of FIC  or the Company  by its  controlling
          person,  Roy  F.  Mitte,  or  in the  Company  by  FIC;  and  the
          occurrence  of certain events of bankruptcy.  If Mr. Mitte ceases
          to control the management of the Company solely by reason  of (i)
          his  death or (ii) his  permanent inability to  perform his usual
          and  customary duties  on  a full-time  basis  on behalf  of  the
          Company and FIC as the result  of physical or mental infirmity, a
          default will occur,  and the  banks holding in  the aggregate  at
          least  66 2/3% of the outstanding  balance of the New Senior Loan
          may, on  or after 180 days  after the date on  which such default
          occurs, declare the New Senior Loan  immediately due and payable.
          Mr. Mitte's ability to communicate and his mobility  are impaired
          as  a result of  a stroke he  suffered in May  1991. However, Mr.
          Mitte continues to control the management of the Company, and Mr.
          Mitte's impairments did not constitute a default under the Senior
          Loan, nor do they constitute a default under the New Senior Loan.
          See Item 10(b)-Executive Officers of the Registrant.

          The outstanding principal balance  of the New Senior Loan  was $-
          59.4 million as of December 31, 1995.

          Regulation

          General.  The  Company's insurance  subsidiaries  are  subject to
          regulation  and  supervision  by  the states  in  which  they are
          licensed to do business. Such regulation is designed primarily to
          protect policy  owners. Although the extent  of regulation varies
          by state,  the respective state insurance  departments have broad
          administrative powers relating to  the granting and revocation of
          licenses   to  transact   business,  licensing  of   agents,  the
          regulation  of trade practices and premium rates, the approval of
          form  and  content of  financial  statements  and  the  type  and
          character of investments.

          These  laws  and  regulations  require  the  Company's  insurance
          subsidiaries to  maintain certain  minimum surplus levels  and to
          file detailed  periodic reports with the  supervisory agencies in
          each of the states  in which they do business  and their business
          and accounts are subject  to examination by such agencies  at any
          time.  The  insurance laws  and  regulations  of the  domiciliary
          states of the Company's  insurance subsidiaries require that such
          subsidiaries be examined at specified intervals.

          Investors-NA and  ILIC are domiciled in the  states of Washington
          and  New  Jersey, respectively.  In  December  1992, Investors-NA
          redomesticated from Pennsylvania to Washington,  and Investors-CA
          merged into Investors-NA. In June, 1993 Standard Life merged into
          Investors-NA. Investors-IN is domiciled in the State of Indiana.

          A  number of  states  regulate the  manner  and extent  to  which
          insurance companies  may  test  for  acquired  immune  deficiency
          syndrome (AIDS) antibodies in connection with the underwriting of 
          life insurance  policies. To  the  extent permitted  by law,  the
          Company's  insurance subsidiaries  consider  AIDS information  in
          underwriting   coverage  and   establishing  premium   rates.  An
          evaluation  of  the financial  impact  of future  AIDS  claims is
          extremely difficult, due in  part to insufficient and conflicting
          data  regarding  the incidence  of  the  disease  in the  general
          population and the  prognosis for the  probable future course  of
          the disease.

          Risk-Based Capital Requirements. Effective  for the 1993 calendar
          year,  the   National  Association  of   Insurance  Commissioners
          ("NAIC") has adopted  Risk-Based Capital ("RBC") requirements  to
          evaluate  the  adequacy  of  statutory  capital  and  surplus  in
          relation to  investment and insurance risks  associated with; (i)
          asset  quality;  (ii) mortality  and  morbidity;  (ii) asset  and
          liability matching;  and (iv) other business  factors. The states
          will use the  RBC formula as  an early warning  tool to  discover
          potential   weakly  capitalized  companies  for  the  purpose  of
          initiating  regulatory  action.  The  RBC  requirements  are  not
          intended  to be  a  basis  for  ranking  the  relative  financial
          strength of insurance companies. In addition, the formula defines
          a  new  minimum  capital   standard  which  will  supplement  the
          prevailing  system  of  low  fixed minimum  capital  and  surplus
          requirements on a state-by-state basis.

          The  RBC  requirements  provide  for  four  different  levels  of
          regulatory  attention  in  those   states  that  adopt  the  NAIC
          regulations,  depending  on  the  ratio of  the  company's  Total
          Adjusted  Capital  (which  generally  consist  of  its  statutory
          capital, surplus  and asset valuation reserve)  to its Authorized
          Control Level RBC. A   "Company Action Level Event"  is triggered
          if  a  company's Total  Adjusted Capital  is  less than  200% but
          greater than or  equal to  150% of its  Authorized Control  Level
          RBC,  or if  a negative  trend  has occurred  (as defined  by the
          regulations) and  Total Adjusted  Capital is  less than  250% but
          more  than 200%  of  its Authorized  Control  Level RBC.  When  a
          Company Action  Level Event  occurs,  the company  must submit  a
          comprehensive plan  to the  regulatory authority  which discusses
          proposed corrective  actions to  improve its capital  position. A
          "Regulatory Action Level Event" is triggered if a company's Total
          Adjusted Capital is less than 150%  but greater than or equal  to
          100% of  its  Authorized Control  Level  RBC. When  a  Regulatory
          Action Level Event occurs,  the regulatory authority will perform
          a  special  examination  of  the   company  and  issue  an  order
          specifying  corrective   actions  that   must  be   followed.  An
          "Authorized  Control Level  Event"  is triggered  if a  company's
          Total  Adjusted Capital  is less  than 100%  but greater  than or
          equal  to  70%  of its  Authorized  Control  Level  RBC, and  the
          regulatory  authority may  take  any action  it deems  necessary,
          including  placing  the  company   under  regulatory  control.  A
          "Mandatory Control Level Event" is triggered if a company's total
          adjusted capital is less than 70% of its Authorized Control Level
          RBC,  and  the regulatory  authority  is  mandated to  place  the
          company under its control. 

          Calculations using  the NAIC formula and  the statutory financial
          statements of the Company's insurance subsidiaries as of December
          31, 1995 indicate that  the Total Adjusted Capital of each of the
          Company's insurance subsidiaries is  above 500% of its respective
          Authorized Control level RBC.

          Solvency Laws Assessments.  The solvency or guaranty laws of most
          states in which the  Company's insurance subsidiaries do business
          may  require   the  Company's  insurance   subsidiaries  to   pay
          assessments   (up  to   certain   prescribed   limits)  to   fund
          policyholder  losses or  liabilities of insurance  companies that
          become  insolvent.  Recent  insolvencies  of  insurance companies
          increase the  possibility that such assessments  may be required.
          These assessments may be deferred or forgiven under most guaranty
          laws  if they would threaten an insurer's financial strength and,
          in certain instances, may be offset against future premium taxes.
          The  insurance companies  record  the expense  for guaranty  fund
          assessments in the period assessed.  The occurrence and amount of
          such  assessments have increased in recent years.  The net amount
          of such  assessment for the Company's  insurance subsidiaries was
          approximately $241,692 in the year ended December 31, 1995.  That
          amount is  net of the  amounts that can be  offset against future
          premium taxes.   The likelihood  and amount of  any other  future
          assessments cannot be estimated and are beyond the control of the
          Company.

          Surplus Debentures  and Dividends. The principal  sources of cash
          for the Company to make payments of principal and interest on the
          Senior  Loan  are  payments   under  the  surplus  debentures  of
          Investors-NA (a Washington-domiciled  corporation) and  dividends
          paid by  Investors-NA, ILIC (a New  Jersey-domiciled company) and
          Investors-IN (an Indiana-domiciled company).

          Under current Washington and New Jersey law, any proposed payment
          of a dividend  or distribution which, together  with dividends or
          distributions paid  during the  preceding twelve  months, exceeds
          the greater of  (i) 10% of statutory surplus as  of the preceding
          December  31 or (ii) statutory  net gain from  operations for the
          preceding calendar year is called an "extraordinary dividend" and
          may  not be paid until either it  has been approved, or a waiting
          period  shall   have  passed  during   which  it  has   not  been
          disapproved,  by the insurance  commissioner. Effective  July 25,
          1993,  Washington  amended  its  insurance  code  to  retain  the
          "greater  of"  standard  but  enacted  requirements  that   prior
          notification  of a proposed  dividend be given  to the Washington
          Insurance Commissioner  and that dividends may be  paid only from
          earned  surplus.  Investors-NA  does  not presently  have  earned
          surplus as defined  by the regulations adopted  by the Washington
          Insurance Commissioner and, therefore, is not presently permitted
          to pay cash dividends. However, since the new law applies only to
          dividend payments, the ability  of Investors-NA to make principal
          and  interest  payments  under  the  surplus  debentures  is  not
          affected. 

          Under  the Indiana  insurance code, a  domestic insurer  may make
          dividend distributions  upon proper  notice to the  Department of
          Insurance, as long as the  distribution is reasonable in relation
          to  adequate  levels  of  policyholder  surplus  and  quality  of
          earnings. Under Indiana law the dividend must be paid from earned
          surplus. Extraordinary  dividend approval would be required where
          a dividend exceeds the greater of 10% of surplus or  the net gain
          from  operations  for the  prior  fiscal  year. Investors-IN  had
          earned surplus of $11,014,294 at December 31, 1995.

          The surplus  debentures were originally issued  by Standard Life.
          Upon  the   merger  of  Standard  Life   into  Investors-NA,  the
          obligations   of   the   surplus  debentures   were   assumed  by
          Investors-NA.  Since Investors-NA  is domiciled  in the  State of
          Washington, the  provisions of Washington insurance  law apply to
          the  surplus  debentures. Under  the  provisions  of the  surplus
          debentures  and current  law, Investors-NA  can pay  interest and
          principal on the surplus debentures without having  to obtain the
          prior approval of the Washington Insurance Commissioner; provided
          that, after giving effect to such payments, the statutory surplus
          of Investors-NA is in  excess of $10 million. As of  December 31,
          1995,  the statutory  surplus  of  Investors-NA was  $59,496,193.
          Investors-NA  does  give  five-days  prior  notification  to  the
          Washington Insurance  Department of each proposed  payment on the
          surplus  debentures  in  accordance  with  an  agreement  between
          Investors-NA and the  Department.  ILCO does  not anticipate that
          Investors-NA  will have  any difficulty  in making  principal and
          interest  payments  on  the  surplus debentures  in  the  amounts
          necessary  to  enable ILCO  to service  the  Senior Loan  for the
          foreseeable future.

          Pursuant to  the surplus debentures, Standard  Life, which merged
          into  Investors-NA  on June  29, 1993,  had  paid to  the Company
          principal and interest totalling  $17,755,412 and $14,970,460  in
          1992 and 1993, respectively.  After the merger, Investors-NA paid
          to the Company principal and  interest on the surplus  debentures
          of $8,573,320  during  the balance of 1993, $26,224,640   in 1994
          and $22,749,576 in 1995.

          Valuation Reserves. Commencing in 1992,  the Mandatory Securities
          Valuation  Reserve  ("MSVR")  required   by  the  NAIC  for  life
          insurance companies  was replaced by a  mandatory Asset Valuation
          Reserve  ("AVR") which is expanded  to cover mortgage loans, real
          estate   and  other   investments.   A  new   mandatory  Interest
          Maintenance Reserve  ("IMR"), designed to defer  realized capital
          gains and losses  due to  interest rate changes  on fixed  income
          investments and  to amortize those  gains and losses  into future
          income, is also effective  for 1992. Previously, realized capital
          gains attributable to interest rate changes  were credited to the
          MSVR  and   had  the  effect   of  reducing  the   required  MSVR
          contributions  of  ILCO's  insurance  subsidiaries.  Effective in
          1992, such realized capital gains are  credited to the IMR. As  a
          result of  these changes, management believes  that the Company's
          insurance subsidiaries are  required to accrue greater  aggregate 
          asset valuation reserves. The combination of the AVR and IMR will
          affect statutory capital and  surplus and may reduce the  ability
          of the Company's insurance subsidiaries to pay dividends and make
          payments on the surplus debentures.

          Insurance  Holding  Company  Regulation.  Investors-NA,  ILIC and
          Investors-IN are  subject to  regulation under the  insurance and
          insurance holding company statutes  of Washington, New Jersey and
          Indiana. The insurance holding  company laws and regulations vary
          from   jurisdiction  to   jurisdiction,  but   generally  require
          insurance  and  reinsurance  subsidiaries  of  insurance  holding
          companies  to  register  with  the  applicable  state  regulatory
          authorities and  to file  with those authorities  certain reports
          describing,  among other  information,  their capital  structure,
          ownership, financial condition, certain intercompany transactions
          and general  business operations. The  insurance holding  company
          statutes  also require  prior regulatory  agency approval  or, in
          certain  circumstances,   prior   notice  of   certain   material
          intercompany transfers of assets  as well as certain transactions
          between   insurance  companies,   their   parent  companies   and
          affiliates.

          Under the  Washington, New  Jersey and Indiana  insurance holding
          company  laws,  unless (i)  certain  filings  are  made with  the
          respective department of insurance, (ii) certain requirements are
          met, including a  public hearing and (iii)  approval or exemption
          is granted  by the  respective insurance commissioner,  no person
          may acquire any  voting security or  security convertible into  a
          voting security  of an  insurance holding  company,  such as  the
          Company, which  controls an  insurance company domiciled  in that
          state, or  merge with such a  holding company, if as  a result of
          such  transaction  such  person  would  "control"  the  insurance
          holding company.  "Control"  is presumed  to  exist if  a  person
          directly or indirectly owns or controls 10% or more or the voting
          securities of another person.

          Potential  Federal  Regulation. Although  the  federal government
          generally  does not  directly  regulate  the insurance  industry,
          federal  initiatives  often  have  an  impact  on  the  business.
          Congress  and  certain  federal  agencies are  investigating  the
          current condition  of the  insurance industry (encompassing  both
          life and  health  and property  and  casualty insurance)  in  the
          United States in  order to  decide whether some  form of  federal
          role  in   the  regulation   of  insurance  companies   would  be
          appropriate.  Congress  is  currently  conducting  a  variety  of
          hearings relating in general  to the solvency of insurers.  It is
          not  possible to  predict the  outcome of any  such congressional
          activity  nor  the potential  effects  thereof  on the  Company's
          insurance subsidiaries.

          Congressional  initiatives directed  at  repeal of  the McCarran-
          Ferguson Act (which exempts the "business of insurance" from most
          federal laws, including the  antitrust laws, to the extent  it is
          subject to state regulation) and judicial decisions narrowing the 
          definition of  "business of insurance" for  McCarran-Ferguson Act
          purposes may  limit the ability of insurance companies in general
          to share  information with respect to  rate-setting, underwriting
          and claims  management practices.  Current  and proposed  federal
          measures  which  may  also  significantly  affect  the  insurance
          industry  include minimum  solvency requirements  and  removal of
          barriers   preventing  banks  from   engaging  in  the  insurance
          business.

          Federal Income Taxation

          The  Revenue  Reconciliation Act  of  1990  amended the  Internal
          Revenue  Code  of  1986 to  require  a  portion  of the  expenses
          incurred  in selling  insurance  products to  be deducted  over a
          period of years, as opposed to an immediate deduction in the year
          incurred. Since  this  change  only affects  the  timing  of  the
          deductions,  it does  not  affect tax  expense  as shown  on  the
          Company's  financial statements prepared in accordance with GAAP.
          However,  the   change  will  increase  the   tax  for  statutory
          accounting  purposes in  the first  few years, which  will reduce
          statutory surplus  and, accordingly,  may decrease the  amount of
          cash dividends that Investors Life-NA can pay to the Company. For
          the years ended December  31, 1993, 1994 and 1995,  the increases
          (decreases) in the current income tax provisions of the Company's
          insurance subsidiaries due to  this change were $429,325, $88,505
          and  ($118,480),  respectively. The  change  has  a negative  tax
          effect for statutory accounting  purposes when the premium income
          of  the Company's  insurance  subsidiaries increases,  but has  a
          positive tax effect when their premium income decreases.

                                 Segment Information

          The principal operations of the  Company's insurance subsidiaries
          are   the   underwriting   of  life   insurance   and  annuities.
          Accordingly, no  separate segment  information is required  to be
          provided  by  the Registrant  for  the  three-year period  ending
          December 31, 1995.

          Item 2. Properties

          The Registrant's  headquarters are located at  Austin Centre, 701
          Brazos, Suite 1400, Austin, Texas. Investors-NA  purchased Austin
          Centre,  an office-hotel  property in  downtown Austin  in August
          1991 for a purchase price of $31,275,000 from an unrelated seller
          that had  previously acquired  the property  through foreclosure.
          Austin  Centre covers  a full city  block and is  a sixteen story
          mixed  use  development  consisting  of 343,664  square  feet  of
          office/retail  space  (predominately  office space),  a  314 room
          hotel  and 61 luxury  apartments, all united  by a  200 foot high
          glass  atrium. The  project  was completed  in  October 1986.  At
          December  31,  1995,  the  office  tower  was  approximately  85%
          occupied, and during 1995 the hotel averaged about 80% occupancy.

          In September 1995, Investors-NA entered  into a contract to  sell 
          Austin Centre to an Austin-based real estate investment firm  for
          a purchase price of $62.675  million, less $1 million to  be paid
          to a capital  reserve account  for the purchaser.   The  contract
          provides that the  sale will  be consummated by  March 29,  1996.
          ILCO  anticipates that the sale proceeds equal to the amount that
          Investors-NA  presently has  invested  in Austin  Centre will  be
          retained  and reinvested  by Investors-NA  and that  most  of the
          balance of  the net proceeds of  the sale will be  used to reduce
          ILCO's bank indebtedness by approximately $15 million.

          On January 31, 1995, ILCO, through Investors-NA, purchased, as an
          investment  property,  an   office  building  project  known   as
          Bridgepoint Office Square  in Austin, Texas  for a cash  purchase
          price of $9.75 million. The property consists of 20 acres of land
          with  four office building sites and two parking structure sites.
          The first phase of  development of the property was  completed in
          1986 and  consists of  a five-story  office building  with 83,474
          square  feet of rentable space  and a 550-car  parking garage. In
          the fourth  quarter of  1995,  construction began  on the  second
          office building, containing approximately 109,000 rentable square
          feet,  and the  other parking  garage. This  second phase  of the
          project is projected to be completed in the summer of 1996.  

          In March 1996, Investors-NA agreed to lease approximately 152,000
          square feet at  Bridgepoint Office Square  to Motorola, Inc.  for
          use  by  the  Power  PC  Alliance,  composed  of  engineers  from
          Motorola,  IBM Corp. and Apple  Computer Inc.   The Alliance will
          occupy  100%  of the  second  office  building and  approximately
          43,000 square feet of the third office building, which Investors-
          NA began constructing  in March  1996.  The  third building  will
          contain  approximately   81,000  rentable  square  feet   and  is
          projected to be finished in late 1996.

          ILCO  leases a building located at 40 Parker Road, Elizabeth, New
          Jersey.   This  building,  which   was  formerly   the  Company's
          headquarters building, contains approximately 41,000  square feet
          of office space. The remaining term of the lease is 11 years, and
          the lease calls for a minimum base rental  of $450,000 per annum.
          The  lease provides that all costs including, but not limited to,
          those for maintenance, repairs,  insurance and taxes be  borne by
          ILCO. The Registrant and ILIC currently occupy a  nominal portion
          of the space  in the 40 Parker Road property  and have sub-leased
          the remaining portion.

          ILIC owns three  buildings which  are adjacent to  the 40  Parker
          Road  building.  One building,  which  leased  to third  parties,
          contains  approximately 3,500  square feet  of space.  The second
          building contains approximately 2,500 square feet of space and is
          leased to persons who perform maintenance services for ILIC's and
          ILCO's properties in Elizabeth, New Jersey.  The  third building,
          purchased during  1985, contains approximately  3,500 square feet
          of space,  and is   partially  leased to  third  parties and  the
          remainder is used to provide accommodations for employees working
          at the New Jersey office. 

          Investors-NA owns  an office building, located at  206 West Pearl
          Street, Jackson, Mississippi. This  building is 66 years old  and
          contains  approximately  85,000  square  feet  of  office  space.
          Investors-NA currently occupies a nominal portion of the space in
          this property and leases space to various commercial tenants.

          The Company  believes that  its properties  and leased space  are
          adequate to meet its foreseeable requirements.

          Item 3. Legal Proceedings

          The Company and its subsidiaries  are defendants in certain legal
          actions related to the normal business operations of the Company.
          Management  believes that  the resolution  of such  legal actions
          will not have a material impact on the financial statements.

          Item 4. Submission of Matters to a Vote of Security Holders

          No matter was submitted  during the fourth quarter of  the fiscal
          year ended December 31, 1995 to a vote of security holders. 


                                       PART II

          Item 5.   Market for the Registrant's Common Stock and Related
                    Stockholder Matters

          A. Market Information

          The following table sets  forth the quarterly high and  low sales
          prices  for the  Company's Common Stock  in The  Nasdaq Small-Cap
          Market for 1995 and 1994.

                                                       Prices
                                             High                Low  

          1995:

          1st Quarter. . . . . . .           $13.50              $10.00
          2nd Quarter. . . . . . .            13.00               10.75
          3rd Quarter. . . . . . .            12.00               10.25
          4th Quarter. . . . . . .            13.25               10.25

          1994:

          1st Quarter. . . . . . .           $13.50              $12.00
          2nd Quarter. . . . . . .            12.50               10.00
          3rd Quarter. . . . . . .            12.50               10.50
          4th Quarter. . . . . . .            12.00                9.25

          The Common Stock of the Company is traded in The Nasdaq Small-Cap
          Market  (NASDAQ Symbol:  ILC0). Quotations  are furnished  by the
          National  Association of  Securities Dealers  Automated Quotation
          System (NASDAQ).

          B. Holders

          The approximate number of  record holders of the Common  Stock of
          the Registrant as of March 20, 1996 was 1,600.

          C. Dividends

          No dividend was declared or paid by the Company during 1993, 1994
          or 1995.  Under the terms of  the Senior Loan and  the New Senior
          Loan, the Registrant was not, and is not, permitted to declare or
          pay  any dividends on  its Common Stock  during the loan  term. A
          more  detailed discussion of the  Senior Loan and  the New Senior
          Loan is set forth in Item 1 hereof.

          The ability of an insurance holding company, such as ILCO, to pay
          dividends to  its shareholders may  be limited  by the  company's
          ability to obtain  revenue, in  the form of  dividends and  other
          payments, from its operating insurance subsidiaries. The right of
          such subsidiaries to pay dividends is generally restricted by the
          insurance laws of their domiciliary states. See  Item 1. Business 
          Regulation - Surplus Debentures and Dividends.

          Item 6. Selected  Financial Data (in thousands,  except per share
          data;   certain  restatements   and  adjustments   are  explained
          following this table.)

                                   Years Ended December 31,

                           1995        1994        1993      1992        1991  

          Revenues     $  122,390  $  114,842 $  117,843 $  139,009 $  152,936

          Benefits &
          Expenses        105,907      99,142    100,525    117,568    133,397

          Income from
          operations       16,483      15,700     17,318     21,441     19,539

          Provision for
          federal income
          taxes             5,769       5,783      5,118      7,540      6,776

          Net Income
          before extra-
          ordinary item
          and cumulative
          effect of
          change in
          accounting
          principle    $   10,714  $    9,917 $   12,200 $   13,901 $   12,763

          Extraordinary
          Item                -0-         -0-    (6,253)        -0-        -0-

          Net Income
          before
          cumulative
          effect of
          change in
          accounting
          principle        10,714       9,917      5,947     13,901     12,763

          Cumulative
          effect of
          change in
          accounting                   
          principle           -0-         -0-    (2,600)        -0-        -0-

          Net Income   $   10,714  $    9,917 $    3,347 $   13,901 $   12,763
           
          Common
          Stock and
          Common  Stock
          Equivalents       5,389       5,378      5,858      7,052      7,149 

          Net Income per    
          share before
          extraordinary
          item and
          cumulative
          effect of
          change in
          accounting
          principle     $    2.11  $     1.93 $     2.20 $     2.06 $    1.89

          Extraordinary 
          Item                -0-         -0-     (1.07)        -0-        -0-

          Net  income per     
          share before
          cumulative
          effect of
          change in
          accounting
          principle          2.11        1.93       1.13       2.06       1.89
                                                
          Cumulative         
          effect of
          change in
          accounting
          principle           -0-         -0-      (.44)        -0-        -0-

          Net income per   
          share         $    2.11  $     1.93 $      .69 $     2.06 $     1.89

          Cash Dividend       -0-         -0-        -0-        -0-       -0-

          Long Term Debt$  59,385  $   66,585 $   84,000 $   90,325 $  111,300

          Total Assets $1,315,293  $1,148,994 $1,266,941 $1,286,733 $1,312,141


               1    Net income per share  for the years ended  December 31,
               1995, 1994, 1993, 1992 and 1991 included the dilutive effect
               resulting from  the  increase in  the  market price  of  the
               Company's   common  stock.   Such  increase   requires  that
               outstanding common  share equivalents be  taken into account
               in  determining   net  income  per  share.   See  "Notes  to
               Consolidated  Financial Statements" for a description of the
               manner of calculation of common share equivalents.


          Item 7.   Management's  Discussion  and  Analysis   of  Financial
                    Condition and Results of Operations

          For  the year  ended December  31, 1995,  ILCO's net  income from 
          operations was $10,714,000 ($2.11  per common share), as compared
          to $9,917,000  ($1.93 per common  share) in 1994  and $12,200,000
          ($2.20 per common share), before extraordinary item and change in
          accounting principle, in 1993.  

          Net  income  for the  years  1995 and  1994  was not  affected by
          extraordinary items.  For the year ended December 31, 1993, after
          giving effect to the cost of early extinguishment of debt (net of
          tax)  and the  effect of  a change  in accounting  principle, net
          income for the period was $3,347,000, or  $.69 per common share. 
          The net  income of ILCO for the year 1993 was affected by (i) the
          costs  associated with the prepayment  in January of  1993 of its
          Subordinated Loans; the prepayment premium resulted in a one time
          charge  to earnings in the amount of  $6,253,000, net of tax, and
          (ii)   the  one  time  charge  to  earnings,  in  the  amount  of
          $2,600,000,  which was  incurred in  connection with  the initial
          adoption of  Financial Accounting  Standard No.  109 ("Accounting
          for Income Taxes").  The effect of each of these items was within
          the  range previously  disclosed by  management in  the Company's
          Form 10-K for the year ended December 31, 1992.  

          The results for  1995 include  the operations  of Investors  Life
          Insurance  Company of  Indiana (formerly  known as  Meridian Life
          Insurance Company)  for  the period  from  February 14,  1995  to
          December  31, 1995.  Investors  Life Insurance Company of Indiana
          ("Investors-IN")  was  purchased  by  ILCO   and  Investors  Life
          Insurance  Company  of  North  America  ("Investors-NA")  for  an
          adjusted  purchase price  of $17.1  million; the  transaction was
          completed on February 14, 1995.  The name change was completed in
          May, 1995.

          The statutory earnings  of the Company's  insurance subsidiaries,
          as required  to be reported to  insurance regulatory authorities,
          before interest  expense, capital  gains and losses,  and federal
          income taxes were  $24,511,342 at December 31,  1995, as compared
          to $21,119,689 at December 31,  1994 and $20,325,814 at  December
          31, 1993.  These statutory earnings are the source to provide for
          the repayment of ILCO's indebtedness.

          The  operating  strategy of  the Company's  management emphasizes
          several   key  objectives:   expense  management;   marketing  of
          competitively priced  insurance  products which  are designed  to
          generate an  acceptable level of profitability;  maintenance of a
          high quality  portfolio of  investment grade securities;  and the
          provision of quality customer service.

          Premium income, net of  reinsurance, for the year 1995  was $11.7
          million, as compared to  $14.3 million in 1994 and  $16.1 million
          in 1993.  The  decline is primarily attributable to  the decision
          to discontinue the writing of credit life and credit accident and
          health insurance, as  well as the reduction in  premiums received
          for traditional  (non-universal) life insurance and  accident and
          health insurance policies.  This  decline was partially offset by
          the premium income resulting  from the inclusion of Investors-IN. 
          For the year 1995, reinsurance premiums ceded were $8.9  million,
          as compared to $10.9 million in 1994 and $11.9 million in 1993.  

          During the first half of 1994, management completed its review of
          the credit  life and credit  disability business of  the Company.
          As  a result  of this  review,  management determined  that these
          product   lines  were   not   producing   desired   profitability
          objectives.  Accordingly, management announced that the Company's
          subsidiaries which underwrote credit insurance  would discontinue
          the writing  of new credit life and  credit disability insurance.
          For the full  year of 1995, this action had  a negative effect on
          premium income in the amount of $5.6 million.

          Earned insurance  charges for the  year ended  December 31,  1995
          were $42.3 million,  as compared  to $39.4 million  for 1994  and
          $38.6 million in 1993.  This source of revenues is related to the
          universal  life  insurance  and   annuity  book  of  business  of
          Investors-NA.   The  increase in  the level  of earned  insurance
          charges  for the  1995  year  is  primarily attributable  to  the
          addition of Investors-IN. 

          In 1995,  Investors-NA entered into a  reinsurance agreement with
          Family Life Insurance Company (an insurance company subsidiary of
          Financial Industries  Corporation and  an affiliated   company of
          Investors-NA),  pertaining to universal life insurance written by
          Family  Life.   The reinsurance  agreement is  on a  co-insurance
          basis and applies to all covered business with effective dates on
          and after January  1, 1995.   The agreement applies to  only that
          portion of  the face  amount of  the  policy which  is less  than
          $200,000;  face amounts  of  $200,000 or  more  are reinsured  by
          Family  Life  with  a third  party  reinsurer.   The  arrangement
          reflects management's plan to  develop universal life business at
          Investors-NA, with  Family Life  concentrating on the  writing of
          term life insurance products. 

          Interest expense was $5.7 million for the year ended December 31,
          1995, as  compared to  $5.2 million  for the  year 1994  and $5.7
          million in 1993.   The increase in 1995, as  compared to 1994, is
          attributable  to an increase in the average rate of interest paid
          on the senior loan - 8.63% in 1995 as compared to 7.04% for 1994,
          the effect  of which  was partially offset  by a decrease  in the
          average  amount  of the  senior loan  ($64.3  million in  1995 as
          compared to $69.4  million in  1994).  The  decrease in  interest
          expense in 1994,  as compared  to 1993, was  attributable to  the
          lower average amount of  the senior loan ($69.4 million  for 1994
          and compared to  $88.9 million  in 1993), offset  partially by  a
          slight  increase  in the  average rate  of  interest paid  on the
          senior loan (7.04% in 1994, as compared to 6.37% in 1993).

          The decline  in long-term interest  rates during 1995,  which was
          related  to general  economic conditions,  had a  positive effect
          upon  the market value of the fixed maturities available for sale
          segment of  the portfolio.  As  of December 31, 1995,  the market
          value of  the  fixed maturities  available for  sale segment  was 
          $483.6 million as compared to a carrying value of $463.7 million,
          or an  unrealized gain $19.9 million.  There is no assurance that
          this unrealized gain willbe realized in the future.

          The investment  income earned on the  Company's portfolio affects
          the  level of  interest rates  which the  Company credits  to its
          universal  life  insurance,  whole  life  insurance  and  annuity
          products.    The  objective of  the  Company  is  to maintain  an
          appropriate margin between the rate of interest which it earns on
          its investments and the rate which it credits to policyholders. 

          Total assets  as of December  31, 1995 ($1.32  billion) increased
          from the  level as  of December  31, 1994 ($1.15  billion).   The
          increase in  total assets is  primarily attributable  to (a)  the
          inclusion of Investors-IN and  (ii) an increase in the  amount of
          separate account assets.

          On January 31, 1995, ILCO, through Investors-NA, purchased, as an
          investment  property, an  office  building project  known as  One
          Bridgepoint Office  Square in Austin,  Texas for a  cash purchase
          price of $9.75  million.  The  property consists  of 20 acres  of
          land, with four office  building sites and two  sites for parking
          garages.   At the time  of the purchase,  the first stage  of the
          development  had already  been completed,  consisting of  a five-
          story  office building with 83,474  square feet of rentable space
          and a 550-car parking  garage. That stage of the  development was
          completed in 1986.   In the fourth quarter of  1995, construction
          commenced on a second  building on the site, with  110,000 square
          feet  of  rentable space,  and the  second  parking garage.   The
          second phase of  the project is expected  to be completed  in the
          summer of 1996.  

          In March 1996, Investors-NA agreed to lease approximately 152,000
          square feet at  Bridgepoint Office Square  to Motorola, Inc.  for
          use  by  the  Power  PC  Alliance,  composed  of  engineers  from
          Motorola,  IBM Corp. and Apple  Computer Inc.   The Alliance will
          occupy  100%  of the  second  office  building and  approximately
          43,000 square feet of the third office building, which Investors-
          NA began constructing  in March  1996.  The  third building  will
          contain  approximately  81,000   rentable  square  feet  and   is
          projected to be finished in late 1996.

          In  January 1996,  the  Company announced  that Investors-NA  had
          entered into an agreement  to sell the Austin Centre,  an office-
          hotel complex in  Austin, Texas.   The selling  price is  $62.675
          million, less  $1 million to be paid to a capital reserve account
          for  the purchaser.    The property,  which  consists of  343,664
          square  feet  of office/retail  space, a  314  room hotel  and 61
          rental  apartments, was  purchased in  1991 for  $31.275 million.
          Since 1992,  the Company has rented space  on three floors of the
          office tower as its headquarters.  The Company anticipates that a
          portion  of  the sale  proceeds,  approximately  the amount  that
          Investors-NA has invested  in the property, will  be retained and
          reinvested.   The balance of the net proceeds of the sale will be 
          used  to   reduce  the  Company's  senior   loan  obligations  by
          approximately $15 million.   The sale contract provides that  the
          sale will be consummated by March 29, 1996.

                                Results of Operations

          For the year ended  December 31, 1995, the Company's  income from
          operations  before  Federal  income   taxes  was  $16,483,000  on
          revenues of $122,390,000, as  compared to $15,700,000 on revenues
          of  $114,842,000 in  1994.    For  the  year  1993,  income  from
          operations  before Federal  income taxes, extraordinary  item and
          cumulative  effect  of   change  in   accounting  principle   was
          $17,318,000 (on revenues of $117,843,000).  

          The  Company's  net income,  net  of  federal  income taxes,  was
          $10,714,000,  or $ 2.11  per common share  for the  year 1995, as
          compared  to $9,917,000, or $1.93  per common share  for the year
          1994  For the year 1993, net income, net of federal income taxes,
          extraordinary items and cumulative effect of change in accounting
          principle, was $3,347,000, or $.69 per common share.   Net income
          per common share in 1995 was affected by a slight increase in the
          number of common  stock and common  stock equivalents which  were
          required to be taken  into account in determining net  income per
          share.   For  the year  ended December  31,  1995, the  amount of
          common  stock  and common  stock  equivalents  was 5,389,000,  as
          compared to 5,378,000 in 1994 and 5,858,000 in 1993.
            
          For  the  year ended  December  31,  1995, annualized  first-year
          premiums and  deposits on deposit type  contracts of Investors-NA
          declined  by  approximately  19%  as   compared  to  1994.    The
          corresponding decline from 1993 to 1994 was 7%.

          During  1995,  the lapse  rate  with  respect  to universal  life
          insurance  policies   increased  slightly  from  the  lapse  rate
          experienced in 1994.  The rate in 1995 was 8.8%, as compared to  
          8.2%  in 1994. The lapse  rate with respect  to traditional (non-
          universal)  life insurance  policies  decreased from  the  levels
          experienced in 1994.  The rate in 1995 was 8.8%, as compared to  
          9.8% in 1994.  The lapse rates experienced during the 1995 period
          were within the ranges anticipated by management.

          As  of  December 31,  1995, the  number  of employees  within the
          Company  was approximately 338.   This level of staffing includes
          employees  who provide  administrative  services to  Family  Life
          Insurance Company, in connection with which Investors-NA receives
          an expense reimbursement.

                           Liquidity and Capital Resources:

          ILCO is a holding  company whose principal assets consist  of the
          common stock of Investors Life Insurance Company of North America
          and  its  subsidiaries  -  Investors Life  Insurance  Company  of
          Indiana (formerly  known as Meridian Life  Insurance Company) and
          InterContinental Life Insurance Company ("ILIC").  ILCO's primary 
          source of funds consists of payments under two Surplus Debentures
          from Investors-NA.   

          As of December 31, 1994, the outstanding principal balance of the
          ILCO's  senior loan obligations was $66.6 million.  On January 2,
          1995,  the Company made a scheduled payment of $4.5 million under
          its  Senior  Loan.     In  connection  with  the  acquisition  of
          Investors-IN in  February, 1995, ILCO borrowed  an additional $15
          million under its  Senior Loan to help finance the  purchase.  On
          April 3, 1995, a principal payment in the amount of $13.2 million
          was  made, which prepaid the  Senior Loan until  October 1, 1995.
          The Senior Loan  had a principal balance at  December 31, 1995 of
          $59.4  million.  In January,  1996, the Company  made a scheduled
          principal payment, in the  amount of $4.5 million.   As of  March
          15,  1996, the  principal balance  of the  Senior Loan  was $54.9
          million.

          ILCO's  principal source  of liquidity  consists of  the periodic
          payment of  principal and  interest by Investors-NA,  pursuant to
          the terms of the Surplus Debentures.  The Surplus Debentures were
          originally issued  by Standard  Life Insurance Company  and their
          terms  were  previously  approved by  the  Mississippi  Insurance
          Commissioner.   Upon the merger of  Standard Life into Investors-
          NA, the  obligations of  the Surplus Debentures  were assumed  by
          Investors-NA.  As of December 31, 1995, the outstanding principal
          balance of  the Surplus Debentures was  $7.0 million and $62.3   
          million, respectively.   Since  Investors-NA is domiciled  in the
          State of  Washington, the provisions of  Washington insurance law
          apply to the  Surplus Debentures.   Under the  provisions of  the
          Surplus  Debentures and  current law,  no prior  approval of  the
          Washington Insurance Commissioner is required for Investors-NA to
          pay  interest or  principal on  the Surplus  Debentures; provided
          that, after giving effect to such payments, the statutory surplus
          of  Investors-NA  is in  excess  of  $10  million  (the  "surplus
          floor").   However, Investors-NA has voluntarily  agreed with the
          Washington Insurance  Commissioner that it will  provide at least
          five days advance notice of payments which it will make under the
          surplus  debenture.    As of  December  31,  1995,  the statutory
          capital and surplus of Investors-NA  was $61.9 million, an amount
          substantially in excess of the surplus floor.  The funds required
          by  Investors-NA to meet its obligations to the Company under the
          terms  of the  Surplus  Debentures are  generated from  operating
          income generated from insurance and investment operations.

          In  addition to  the  payments under  the  terms of  the  Surplus
          Debentures, ILCO has received  dividends from Standard Life (now,
          from Investors-NA).  Effective  July 25, 1993, Washington amended
          its  insurance  code to  retain  the  "greater of"  standard  for
          payment  of dividends to  shareholders, but  enacted requirements
          that  prior notification of a  proposed dividend be  given to the
          Washington Insurance Commissioner and  that cash dividends may be
          paid only  from earned  surplus. Investors-NA does  not presently
          have  earned surplus as defined by the regulations adopted by the
          Washington   Insurance  Commissioner   and,  therefore,   is  not 
          permitted  to pay a  cash dividend.   However, since the  new law
          applies only to dividend payments, the ability of Investors-NA to
          make principal and interest payments under the Surplus Debentures
          is not affected.  ILCO does not anticipate that Investors-NA will
          have any difficulty in making principal and interest  payments on
          the Surplus Debentures in the amounts necessary to enable ILCO to
          service the Senior Loan for the foreseeable future.

          Investors-IN is domiciled  in the  State of Indiana.   Under  the
          Indiana  insurance code,  a  domestic insurer  may make  dividend
          distributions upon proper notice  to the Department of Insurance,
          as long as the distribution is reasonable in relation to adequate
          levels of policyholder  surplus and quality  of earnings.   Under
          Indiana law  the  dividend  must  be paid  from  earned  surplus.
          Extraordinary  dividend  approval  would   be  required  where  a
          dividend  exceeds the greater  of 10% of surplus  or the net gain
          from  operations  for  the   prior  fiscal  year.    Investors-IN
          currently has earned surplus.

          ILCO's net cash flow  provided by (used in) operating  activities
          was    $10.3 million  for the  year ended  December 31,  1995, as
          compared  to ($15.3) million  for the  same period in 1994.  This
          change is primarily due to fluctuations in the amount of deferred
          federal  income taxes, related to the market value of the portion
          of  investments assets  that are  fixed maturities  available for
          sale.

          Management  believes that  its cash,  cash equivalents  and short
          term investments are sufficient to meet the needs of its business
          and to satisfy debt service.

                                     Investments

          As  of December  31,  1995,  the  book  value  of  the  Company's
          investment assets  totaled $669.5 million, as  compared to $547.7
          million as of December 31, 1994.  Total assets as of December 31,
          1995 ($1.32  billion) increased from the level as of December 31,
          1994  ($1.15      billion).   The  increase  in  total  assets is
          primarily attributable  to the  inclusion of Investors-IN  and an
          increase  in  the  amount  of  separate account  assets  and  the
          unrealized gain in the market value of fixed maturities available
          for sale.

          The level of short-term investments at the end of 1995 was $86.0 
          million,  as compared to  $94.9 million at  the end of  1994. The
          decline  in  the level  of  short-term  investments reflects  the
          actions of  management to  diversify the investment  portfolio of
          the Company and the investment in the development of Bridgepoint.
           
          The  fixed  maturities available  for  sale  portion of  invested
          assets  at December 31, 1995  was $483.6 million.   The amortized
          cost of the  fixed maturities  available for sale  segment as  of
          December  31,  1995  was   $463.7  million,  representing  a  net
          unrealized  gain  of $19.9       million.   This  unrealized gain 
          principally reflects changes in interest rates from the date  the
          respective investments were purchased.  To reduce the exposure to
          interest rate changes, portfolio investments are selected so that
          diversity,  maturity  and   liquidity  factors  approximate   the
          duration of associated policyholder liabilities.

          The assets held by ILCO's life insurance subsidiaries must comply
          with  applicable  state  insurance  laws  and  regulations.    In
          selecting investments  for the  portfolios of its  life insurance
          subsidiaries, the Company's emphasis is to obtain targeted profit
          margins, while  minimizing  the  exposure  to  changing  interest
          rates.  Thisobjective is implemented byselecting primarily short-
           to medium-term,  investment grade  fixed income securities.   In
          making such portfolio selections,  the Company generally does not
          select  new investments which  are commonly referred  to as "high
          yield" or "non-investment grade."  

          The  Company's fixed  maturities portfolio  (including short-term
          investments), as  of December  31, 1995, included  a non-material
          amount   (1.1%   of   total  fixed   maturities   and  short-term
          investments) of  debt securities which, in  the annual statements
          of the companies as filed with  state insurance departments, were
          designated   under   the   National  Association   of   Insurance
          Commissioners ("NAIC")  rating system as "3"  (medium quality) or
          below.   For  the year  ended December  31, 1994,  the comparable
          percentage was 1.1%.  The  majority of these non-investment grade
          investments  are  concentrated in  the  medium  quality (or  "3")
          category, with only  0.2% receiving  an NAIC rating  of "4"  (low
          quality) or below as of December 31, 1995, as compared to 0.5% as
          of December 31, 1994.  

          The consolidated balance sheets of the Company as of December 31,
          1995 include $61.2 million of "Notes receivable from affiliates",
          represented by (i) a  loan of $22.5 million from  Investors-NA to
          Family Life Corporation and a $2.5 million loan from Investors-CA
          to  Financial  Industries  Corporation  (which is  now  owned  by
          Investors-NA  as  a result  of  the merger  of  Investors-CA into
          Investors-NA) and $1.7 million  of additions to the $2.5  million
          note made in accordance with the terms of such note;  these loans
          were granted in  connection with the  1991 acquisition of  Family
          Life Insurance Company by a wholly-owned subsidiary of FIC (ii) a
          loan  of $30 million  by Investors-NA to  Family Life Corporation
          made in July, 1993, in connection with  the prepayment by the FIC
          subsidiaries of indebtedness which  had been previously issued to
          Merrill Lynch  as part of the 1991 acquisition and (iv) a loan of
          $4.5 million by Investors-NA  to Family Life Insurance Investment
          Company  made   in  July,  1993,  in  connection  with  the  same
          transaction described above.   The NAIC has assigned a  rating of
          "3"  to  the notes  described above.  These  loans have  not been
          included in the preceding description of NAIC rating percentages.

          Management  believes that the absence  of any material amounts of
          "high-yield"  or "non-investment  grade" investments  (as defined
          above)  in  the portfolios  of  its  life insurance  subsidiaries 
          enhances  the ability of the Company to service its debt, provide
          security to its policyholders and to credit relatively consistent
          rates of return to its policyholders.

                                Accounting Development

          Stock-Based Compensation:

          In October, 1995, the Financial Accounting standards Board issued
          Statement of  Financial Accounting Standard No.  123, "Accounting
          for  Stock-Based   Compensation."    This   Statement  encourages
          companies  to adopt a fair  value based method  of accounting for
          employee stock  options and  other equity instruments  awarded as
          compensation.   Under this method, compensation  expense equal to
          the  fair value  of  the  security at  the  award  grant date  is
          recognized as compensation expense over the vesting period of the
          awarded security.   However, the Statement  also allows companies
          to  continue to  account for  stock-based compensation  under the
          intrinsic  value  based  method,  as   prescribed  by  Accounting
          Principles Board  Opinion No. 25, "Accounting for Stock Issued to
          Employees."    Under  the   intrinsic  value  based  method,  the
          compensation  cost  is computed  as the  excess,  if any,  of the
          quoted market  price of the  equity security  at the  measurement
          date  over the  amount  an  employee  must  pay  to  acquire  the
          security.   If  a company  continues to  account  for stock-based
          compensation under the intrinsic value based method, it must make
          certain pro-forma  disclosures in the footnotes  to the financial
          statements for the difference in the fair value based  method and
          the intrinsic  value based method.   This Statement  is effective
          for stock-based compensation transactions entered into in  fiscal
          years that begin after December 15, 1995.

          Management  intends  to  continue  to   account  for  stock-based
          compensation under the intrinsic value based method as prescribed
          by APB No. 25, and  allowed under SFAS No. 123.  The company will
          make the  appropriate pro-forma  disclosures required by  SFAS in
          1996.  

          Item 8. Financial Statements and Supplementary Data

          The following  Financial Statements of ILCO  and its consolidated
          subsidiaries have been filed as part of this report:

               1.   Report   of   Price    Waterhouse   LLP,    Independent
                    Accountants, dated March 27, 1996.

               2.   Consolidated Balance  Sheets, as of  December 31,  1995
                    and December 31, 1994.

               3.   Consolidated Statements of  Income for the years  ended
                    December 31 1995, 1994 and 1993.

               4.   Consolidated  Statements  of  Changes in  Shareholders'
                    Equity for the  years ended December 31, 1995, 1994 and
                    1993.

               5.   Consolidated  Statements  of Cash  Flows for  the years
                    ended December 31, 1995, 1994 and 1993.

               6.   Notes to Consolidated Financial Statements.

          Item 9.   Changes  in  and  Disagreements  with   Accountants  on
                    Accounting and Financial Disclosure

          No independent  accountant who audited the Registrant's financial
          statements  has resigned  or been dismissed  during the  two most
          recent fiscal years. 


                                       PART III

          Item 10.  Directors and Executive Officers of Registrant

               (a) Directors of the Registrant

          The  names and ages of  the current directors  of the Registrant,
          their principal  occupations or  employment during the  past five
          years and other data  regarding them are set forth below.  All of
          the  directors, other  than Mr.  Hamm, were  elected at  the 1995
          annual shareholders meeting. Mr. Hamm was appointed a director by
          the Board of Directors  on September 22, 1995. The  data supplied
          below  is based on information provided  by the directors, except
          to the extent that such data is known to the Registrant.
                                                             
                              Principal Occupations          Director
          Name                and Other Information          Since     Age

          W. Lewis Gilcrease  Dentist   practicing  in   San   1988    63
                              Marcos,  Texas.   Director  of
                              Financial           Industries
                              Corporation from  1979 to July
                              6, 1991.

          James M. Grace      Vice  President and  Treasurer   1984    52
                              of the  Company since January,
                              1985.        Executive    Vice
                              President,    Treasurer    and
                              Director  of  InterContinental
                              Life  Insurance  Company since
                              1989.       Vice    President,
                              Treasurer   and  Director   of
                              Financial           Industries
                              Corporation since  July, 1976.
                              Executive  Vice President  and
                              Treasurer  of  Investors  Life
                              Insurance  Company   of  North
                              America since  1989; Executive
                              Vice President, Treasurer  and
                              Director   of    Family   Life
                              Insurance      Company      (a
                              subsidiary     of    Financial
                              Industries  Corporation) since
                              June    1991.        Director,
                              Executive  Vice  President and
                              Treasurer  of  Investors  Life
                              Insurance  Company of  Indiana
                              since February 1995.

          Richard A. Kosson   Certified   Public  Accountant   1981    63
                              and  a partner in  the firm of 
                              Manheim,  Kosson  & Novick  in 
                              Millburn, New Jersey.

          Roy F. Mitte        Chairman  of   the  Board  and   1984    64
                              Chief Executive Officer of the
                              Company  and  InterContinental
                              Life  Insurance  Company since
                              January,  1985.   President of
                              the Company since April, 1985.
                              Chairman    of    the   Board,
                              President and  Chief Executive
                              Officer      of      Financial
                              Industries  Corporation  since
                              1976.  Chairman of  the Board,
                              President and  Chief Executive
                              Officer   of   Investors  Life
                              Insurance  Company   of  North
                              America since  December, 1988.
                              Chairman    of    the   Board,
                              President and  Chief Executive
                              Officer    of   Family    Life
                              Insurance  Company  since June
                              1991.  Chairman of  the Board,
                              President and  Chief Executive
                              Officer   of   Investors  Life
                              Insurance  Company of  Indiana
                              since      February      1995.
                              Chairman,    ILG    Securities
                              Corporation   since   December
                              1988.

          Donald Shuman       Real     estate    specialist,   1980    71
                              engaged    in     sales    and
                              management of  real estate for
                              his  own  company, Don  Shuman
                              Associates,   a  real   estate
                              brokerage and management firm.

          Eugene E. Payne     Vice President  of the Company   1989    53
                              since   December   1988    and
                              Director since May 1989.  Vice
                              President   and  Director   of
                              Financial           Industries
                              Corporation   since   February
                              1992.        Executive    Vice
                              President,    Secretary    and
                              Director  of   Investors  Life
                              Insurance  Company   of  North
                              America  since  December 1988.
                              Executive Vice President since
                              December  1988   and  Director
                              since     May     1989      of
                              InterContinental          Life
                              Insurance Company.   Executive 
                              Vice President, Secretary  and 
                              Director   of    Family   Life
                              Insurance  Company since  June
                              1991.    Director,   Executive
                              Vice  President and  Secretary
                              of  Investors  Life  Insurance
                              Company   of   Indiana   since
                              February 1995.

          Theodore A. Fleron  Vice President  of the Company   1991    56
                              since  May,  1992.   Assistant
                              Secretary  since  June,  1990.
                              Senior Vice President, General
                              Counsel,  Assistant  Secretary
                              and Director of Investors Life
                              Insurance  Company  of   North
                              America  and  InterContinental
                              Life  Insurance Company  since
                              July, 1992.   General Counsel,
                              Assistant     Secretary    and
                              Director  of   Investors  Life
                              Insurance  Company  of   North
                              America  and  InterContinental
                              Life  Insurance  Company  from
                              January,  1989 to  July, 1992.
                              Senior Vice President, General
                              Counsel      and     Assistant
                              Secretary  of  Investors  Life
                              Insurance  Company of  Indiana
                              since June, 1995.

          Joseph F. Crowe     Vice President and Director of   1991    57
                              the  Company  since May  1991.
                              Vice President and Director of
                              Financial           Industries
                              Corporation   since   February
                              1992.        Executive    Vice
                              President   and  Director   of
                              Investors    Life    Insurance
                              Company  of North  America and
                              InterContinental          Life
                              Insurance  Company since  June
                              1991.        Executive    Vice
                              President   and  Director   of
                              Family Life  Insurance Company
                              since June 1991.  Director and
                              Executive  Vice  President  of
                              Investors    Life    Insurance
                              Company   of   Indiana   since
                              February 1995.   From December
                              1986 to  March 1991, Executive
                              Vice  President  of   Personal
                              Financial Security Division of
                              Aetna Life & Casualty Company. 

          Thomas C. Richmond  Director  from  March 1989  to   1994    54
                              February  1990,   Senior  Vice
                              President since January,  1993
                              and Vice  President from March
                              1989   to  January,   1993  of
                              Investors    Life    Insurance
                              Company  of North  America and
                              InterContinental          Life
                              Insurance  Company.     Senior
                              Vice President  of Family Life
                              Insurance  Company since  June
                              1991.   Senior  Vice President
                              of  Investors  Life  Insurance
                              Company of  Indiana since June
                              1995.

          Steven P. Schmitt   Senior  Vice  President  since   1994    49
                              April 1992  and Director, Vice
                              President     and    Assistant
                              Secretary since August 1989 of
                              Investors    Life    Insurance
                              Company  of North  America and
                              InterContinental          Life
                              Insurance  Company.     Senior
                              Vice  President   since  April
                              1992  and  Director  and  Vice
                              President  since June  1991 of
                              Family Life Insurance Company.
                              Director,      Senior     Vice
                              President     and    Assistant
                              Secretary  of  Investors  Life
                              Insurance  Company of  Indiana
                              since June 1995.

          Roger H. Hamm       Executive  Vice President  and   1995    51
                              Director  of  Investors   Life
                              Insurance Company  of Indiana,
                              Investors    Life    Insurance
                              Company  of North  America and
                              Family Life  Insurance Company
                              since   August  1995.     Vice
                              President   and   Director  of
                              Financial           Industries
                              Corporation  and  the  Company
                              since      September     1995.
                              Executive  Vice  President  of
                              InterContinental          Life
                              Insurance Company since August
                              1995.  Vice President of Aetna
                              Life  & Casualty  Company from
                              1972 to 1995.

          Mr.  Shuman  was  the  general partner  of  Shuman-Carlisle  Mall 
          Associates,  a  partnership  that  owned a  400,000  square  foot
          shopping  mall located  in  Carlisle, Pennsylvania.   In  January
          1993,  the partnership filed a petition pursuant to Chapter 11 of
          the Federal  Bankruptcy Code, and that  bankruptcy proceeding was
          concluded in early 1995.

          The  incumbent directors  have been  nominated for  submission to
          vote  of  the shareholders  for  reelection  at the  1996  annual
          shareholders' meeting.  

               (b)  Executive Officers of the Registrant

          The following  table sets forth the names and ages of the persons
          who have  served as  Registrant's Executive Officers  during 1995
          together with all  positions and  offices held by  them with  the
          Registrant.   Officers are  elected to serve  at the  will of the
          Board of  Directors or until  their successors have  been elected
          and qualified.

          Name                     Age       Positions and Offices

          Roy F. Mitte             64        Chairman of the Board,
                                             President and Chief
                                             Executive Officer

          James M. Grace           52        Vice President and Treasurer
           
          Eugene E. Payne          53        Vice President and Secretary

          Joseph F. Crowe          57        Vice President

          Roger H. Hamm            51        Vice President

          In May 1991, Roy F. Mitte suffered a stroke, resulting in partial
          paralysis affecting his speech and mobility.  Mr. Mitte continues
          to  make  the  requisite  decisions  in  his  capacity  as  Chief
          Executive Officer,  although his  ability to communicate  and his
          mobility are impaired.

               (c)  Identification of certain significant employees

          Not Applicable.


               (d)  Family relationships

          Not Applicable.

               (e)  Business experience

          All of the executive  officers of the Company are  members of the
          Board  of  Directors  and  their  business  experience  has  been
          outlined in Item 10(a). 

               (f)  Compliance  with  Section   16(a)  of  the   Securities
                    Exchange Act of 1934

          Section 16(a) of the Securities Exchange Act of 1934 requires the
          Company's  officers and directors, and persons  who own more than
          ten percent  of  a  registered  class  of  the  Company's  equity
          securities, to file reports of beneficial ownership on Form 3 and
          changes  in  beneficial  ownership on  Forms  4  and  5 with  the
          Securities  and Exchange  Commission.   Officers,  directors  and
          greater  than  ten-percent  shareholders   are  required  by  SEC
          regulation to  furnish the  Company with  copies  of all  Section
          16(a) forms they file.   Based solely on review of the  copies of
          such forms  furnished to the Company,  or written representations
          that no Forms 5  were required, the Company believes  that during
          the  period from January 1,  1995 through December  31, 1995, all
          Section  16(a) filing  requirements  applicable to  its officers,
          directors  and greater  than ten-percent  beneficial owners  were
          complied with.

          Item 11. Executive Compensation

          Summary Compensation Table

          The  following  table  sets   forth  information  concerning  the
          compensation of the Company's Chief Executive Officer and each of
          the  four other persons who were serving as executive officers of
          the Company at  the end  of 1995 and  received cash  compensation
          exceeding $100,000 during 1995.

                             Annual Compensation    
                                                      Long Term
                                                      Compensa-
                                                      tion
                                                      Awards  
     Name and                                         Stock
     Principal                                        Options    All Other
     Position   Year  Salary(1) Bonus(1)     Other(2) (Shares)   Compensation  

     Roy F.
     Mitte,
     Chairman,
     President
     and Chief  1995  $286,643      -0-       -0-        -0-     $713,513(4)
     Executive  1994   251,750  576,159(3)    -0-        -0-    1,376,663(5)
     Officer    1993   251,750      -0-       -0-        -0-    3,237,120(6)

     James M.     
     Grace,   
     Vice                                            
     President  1995   195,000      10,000    -0-(7)     -0-        -0-
     and        1994   195,000       2,500    -0-        -0-        -0-
     Treasurer  1993   195,000       5,000    -0-        -0-        -0-

     Eugene E.
     Payne,                                       
     Vice                                         
     President  1995   195,000      10,000    -0-(8)     -0-       -0-
     and        1994   195,000       5,000    -0-        -0-       -0-
     Secretary  1993   195,000        -0-     -0-        -0-       -0-
                                         
     Joseph F.
     Crowe, 
     Vice       1995   195,000     10,000      -0-        -0-       -0-
     Presi-     1994   195,000      5,500      -0-        -0-       -0-
     dent       1993   195,000      3,000      -0-        -0-       -0-
                                         
     Roger H.                                               
     Hamm, Vice                                             
     Presi-     
     dent(9)    1995    67,308      -0-     175,371(10)  -0-       -0-
                                                    

          (1)  The  executive  officers  of  the  Company  have  also  been
          executive officers  of the  Company's insurance  subsidiaries and
          FIC and  FIC's  insurance  subsidiary, Family  Life.    The  only
          executive officer who  has been paid compensation  by Family Life
          is Mr. Mitte, who  received $216,857 in salary in  1995, $251,750
          in salary and $538,080 in bonus in 1994 and $251,700 in salary in
          1993  from Family  Life, which  amounts are  not included  in the
          table above.  Family Life reimbursed the Company (or, in the case
          of  Mr. Mitte paid Mr.  Mitte directly) the  following amounts as
          Family   Life's   share  of   these   executive  officers'   cash
          compensation for  1993, 1994  and 1995:   $251,700, $789,830  and
          $216,857,  respectively, for  Mr.  Mitte;  $55,750,  $70,590  and
          $88,293,  respectively,  for  Mr.  Grace;  $91,650, $126,750  and
          $79,875,  respectively,  for  Dr.  Payne;  $55,350,  $68,250  and
          $88,293, respectively,  for Mr.  Crowe; and $109,205  (1995 only)
          for Mr. Hamm.

          (2)  Does not include the value of perquisites and other personal
          benefits because  the aggregate  amount of any  such compensation
          does not  exceed the lesser of $50,000 or 10 percent of the total
          amount of annual salary and bonus for any named individual.

          (3)   The Company's Compensation Committee  made a recommendation
          to the  Board of Directors, which the Board adopted, that a bonus
          be paid to  Mr. Mitte to enable him to pay  off the $650,000 loan
          that the Company had made  to Mr. Mitte in 1989 and  to reimburse
          him  for the amount  of federal income tax  payable on the bonus.
          Since the Company and FIC have usually each paid one-half  of Mr.
          Mitte's cash  compensation, FIC's  Board of Directors,  acting on
          the  recommendation of  its Compensation  Committee, subsequently
          authorized  FIC to  pay  $500,000 of  that  bonus to  Mr.  Mitte.
          Therefore, the Company paid $576,159,  and FIC paid $500,000,  of 
          the bonus.

          (4)  In 1989, the Board  of Directors granted Mr. Mitte   options
          to  purchase 600,000  shares (as  adjusted for  the three-for-one
          stock split effective February  15, 1990) of the Common  Stock of
          the  Company in equal annual installments of 150,000 shares each.
          Each  installment was  subject to  the approval  of the  Board of
          Directors and is exercisable for a  period of ten years from  the
          date the options become exercisable at a price of $1.00 per share
          (as  adjusted).     The  Board  of   Directors  voted  to   award
          installments  of 150,000 shares in  each of 1989,  1990, 1991 and
          1992.  In October 1992, Mr. Mitte surrendered to the Company  for
          cancellation options to purchase 120,000 shares.  The Company and
          Mr.  Mitte  entered into  a contract  in  1993 providing  for the
          cancellation in 1993  of 240,000 options for an  aggregate amount
          of $3,237,120  and the  cancellation in  subsequent years of  the
          remaining  options for  an aggregate  amount of  $3,610,240.   In
          addition,  the  Company  agreed  to  pay  Mr.  Mitte  the  amount
          necessary  to ensure that Mr. Mitte will receive the same amount,
          after  federal income  tax, that  he would  have received  if the
          options had been cancelled  in 1992.  During 1995, Mr.  Mitte was
          paid $836,582 for the cancellation in 1995 of options to purchase
          50,000 shares  of ILCO's Common  Stock, $156,323 for  the federal
          income  tax reimbursement relating to the cancellation in 1994 of
          options  to  purchase 68,500  shares  and $127,608  as  the final
          payment  relating  to the  cancellation  in  1993 of  options  to
          purchase 240,000 shares.  These option cancellation payments were
          made  pursuant  to  the  contract  referred  to  above.     FIC's
          Compensation Committee  made a  recommendation to FIC's  Board of
          Directors, which it  adopted, that, in lieu of paying Mr. Mitte a
          bonus as  it has in the  past, FIC paid $407,000  of these option
          cancellation payments to Mr. Mitte, with the balance of $713, 513
          being paid by ILCO.

          (5)  During 1994,  the Company  paid Mr.  Mitte $997,520  for the
          cancellation  in 1994 of options to purchase 68,500 shares of the
          Company's Common Stock  and $379,143 for  the federal income  tax
          reimbursement relating  to the cancellation in 1993 of options to
          purchase  240,000  shares.   Both  of  these payments  were  made
          pursuant to the contract referred to in footnote (4).
           
          (6)   The Company paid  this amount in 1993 to  Mr. Mitte for the
          cancellation  of  options  to  purchase  240,000  shares  of  the
          Company's Common  Stock pursuant to  the contract referred  to in
          footnote (4).

          (7)  Mr. Grace exercised stock options in 1995 to purchase 12,000
          shares of  the Company's  Common Stock.   See  "Aggregated Option
          Exercises in 1995" below.

          (8)  Dr. Payne exercised stock options in 1995 to purchase 16,000
          shares of  the Company's  Common Stock.   See "Aggregated  Option
          Exercises in 1995" below. 

          (9)   Mr.  Hamm became  an  executive officer  of the  Company in
          August 1995.

          (10) This amount was paid as relocation assistance by the Company
          to Mr. Hamm in connection with his relocation from Connecticut to
          Austin, Texas.

          Option Grants in 1995

          The only executive officer  of the Company who was  granted stock
          options  during  1995 was  Roger H.  Hamm,  who was  granted non-
          qualified stock  options on  August 14,  1995 to  purchase 60,000
          shares of the Company's  Common Stock at $11.12 per  share, which
          was the market price on the date of grant.  No other options were
          granted  in 1995.  Mr.  Hamm's options become  exercisable in the
          following  non-cumulative  installments  of  shares:  20%  of the
          shares covered by the option on the sixth anniversary of the date
          of  grant and  an additional  20% of  the shares  on each  of the
          seventh,  eighth, ninth  and tenth anniversaries  of the  date of
          grant.   The period of exercisability for each 20% installment is
          one  year from  the anniversary  date on  which such  installment
          becomes  exercisable.    To  the  extent the  optionee  does  not
          exercise  that  20%  portion   during  the  one-year  period,  it
          terminates.   The  last 20%  installment  of Mr.  Hamm's  options
          expires on August 14, 2006.

          The  rules  of the  Securities  and  Exchange Commission  ("SEC")
          require the Company to  indicate the value of Mr.  Hamm's options
          at  the end  of  the option  terms  if the  stock  price were  to
          appreciate  annually by  5%  and 10%,  respectively.   Since  Mr.
          Hamm's  options become  exercisable  in  non-cumulative  one-year
          installments  of 20% each, the potential  realizable value at the
          assumed  annual rates of 5%  and 10% of  stock price appreciation
          are set forth in the following table at the end of each of  those
          five one-year periods:

                                           5%             10%   

          August 14, 2002               $ 54,360       $126,597
          August 14, 2003                 63,750        152,600
          August 14, 2004                 73,609        181,204
          August 14, 2005                 83,962        212,668
          August 14, 2006                 94,832        247,279
               Total                    $370,513       $920,348

          Therefore, if  the price of the Company's  Common Stock increased
          5%  annually during the eleven-year term of Mr. Hamm's option and
          if  Mr. Hamm exercised all  of his options at  the end of each of
          the  five  year  periods that  they  are  exercisable, the  total
          potential  realizable  value  of   his  stock  options  would  be
          $370,513.   If  the annual  rate of  appreciation were  10% under
          those  same assumptions,  the  total  potential realizable  value
          would  be  $920,348.    These  potential  realizable  values  are
          presented in an effort to comply with the SEC's rules and are not 
          intended  to  forecast  future   appreciation,  if  any,  in  the
          Company's Common Stock.

          Aggregated Option Exercises in 1995

          The  following  table  sets  forth  information  concerning  each
          exercise  of stock options during  1995 by each  of the executive
          officers of the Company.

                                   Shares
                                   Acquired            Value
          Name                     On Exercise (#)     Realized ($)

          James M. Grace           12,000              $ 90,540
          Eugene E. Payne          16,000               134,220

          Aggregated Stock Option Values

          The following table  sets forth information  with respect to  the
          unexercised  options  held  by  the  executive  officers  of  the
          Company. 

                                                          Value of
                          Number of                      Unexercised
                       Unexercised Options               In-the-Money
                           Held at                        Options at
                        December 31, 1995              December 31, 1995   
          Name      Exercisable Unexercisable     Exercisable Unexercisable


          Roy F.      121,500      -0-           $1,862,000(1)     -0-
          Mitte


          James M.     42,000    36,000             389,340(2)   339,120(2)
          Grace

          Eugene E.    26,000    18,000             244,920(2)   169,560(2)
          Payne

          Joseph F.    30,000    30,000             120,000(2)   120,000(2)
          Crowe

          Roger H.
          Hamm           -0-     60,000                 -0-       97,800(2)

                               
          (1) Represents the amount that the Company has  agreed to pay for
          the cancellation of Mr. Mitte's options after 1995.

          (2) Based on the closing price  of the Company's Common Stock  on
          NASDAQ on December 29, 1995 ($12.75). 

          Members of Compensation Committee

          W. Lewis Gilcrease, Donald  Shuman and Richard A. Kosson  are the
          members  of  the Company's  Compensation  Committee, which  makes
          recommendations to  the Board of  Directors with  respect to  the
          Chief Executive Officer's compensation.

          Compensation Committee Interlocks and Insider Participation

          Roy  F.  Mitte  determines  the  compensation  of  all  executive
          officers of  the Company, other than the Chief Executive Officer.
          Mr.  Mitte  is the  Chairman of  the  Board, President  and Chief
          Executive Officer of the Company and FIC.  He also determines the
          compensation of  all executive officers  of FIC,  other than  the
          Chief Executive Officer.

          Pension Plan Table

          The following table sets  forth estimated annual pension benefits
          payable  upon  retirement  at  age  of  65  under  the  Company's
          noncontributory  defined  benefit  plan  ("Pension  Plan") to  an
          employee in the  final pay and  years of service  classifications
          indicated, assuming a straight life annuity form of benefit.  The
          amounts shown in the  table do not reflect the  reduction related
          to Social Security benefits referred to below.

                                         Years of Service             
                                                              30 or
          Remuneration           15        20        25       more 

          $125,000            $31,250   $41,667   $52,083   $62,500
           150,000             37,500    50,000    62,498    75,000
           175,000             43,750    58,333    72,914    87,500
           200,000             50,000    66,667    83,330   100,000

          The normal retirement benefit provided under the  Pension Plan is
          equal to 1-2/3% of  final average eligible earnings less  3/4% of
          the participant's Social Security covered compensation multiplied
          by the number of years of credited service (up to 30 years).  The
          compensation used in determining  benefits under the Pension Plan
          is the highest average earnings received in any  five consecutive
          full-calendar  years  during  the  last  ten full-calendar  years
          before the participant's  retirement date.  The maximum amount of
          annual  salary and bonus that can be used in determining benefits
          under the Pension Plan is $200,000 for any year prior to 1994 and
          is $150,000 for 1994 and each subsequent year.

          The  annual eligible  earnings,  for 1995  only,  covered by  the
          Pension  Plan (salary and bonus  up to $150,000)  with respect to
          the individuals  reported in the Summary  Compensation Table were
          as follows, with their respective years of credited service under
          the Pension Plan at December 31, 1995 being shown in parentheses:
          Mr. Mitte, $150,000 (8 years), Mr. Grace, $150,000 (8 years), Dr.
          Payne, $150,000 (7 years) and Mr. Crowe, $150,000 (5 years). 

          Compensation of Directors

          Directors  who are not officers  or employees of  the Company are
          paid a $5,000  annual fee,  and are compensated  $1,000 for  each
          regular or special meeting  of the Board of Directors  which they
          attend  in person.   In  the case of  telephonic meetings  of the
          Board, non-employee directors who  participate in such telephonic
          meetings  are compensated $500  for such meeting.   Directors who
          participate via  telephone in a regular or  special meeting which
          is held by other than conference telephone are not  entitled to a
          fee for such a meeting.

          Non-employee  directors serving  on committees  of the  Board are
          compensated in the amount of $500 for each committee meeting they
          attend  whether such participation is  in person or by telephone,
          provided that  the committee meeting is held  on a day other than
          that on which the Board meets.
           
          Employment Agreements and Change In Control Arrangements

          The  terms  and  conditions  of employment  agreements  that  the
          Company would  enter into upon  the occurrence of  certain events
          that  result in the agreements taking effect were approved by the
          Board of Directors with respect to Messrs. Grace, Payne and Crowe
          in 1991 and  Mr. Hamm in 1995.  Each  agreement would include two
          independent provisions with respect to the effective date and the
          term of  each agreement.  First, the  term of the agreement would
          begin on the earlier of (i) the date of retirement (early, normal
          or  deferred)  of Roy  F. Mitte  from  his position  as Chairman,
          President  and Chief Executive Officer of the Company or (ii) the
          date of death or disability of Mr.  Mitte, and would terminate on
          the last day of the twelfth month next following the commencement
          date  of the term of the agreement, unless extended upon mutually
          acceptable terms.

          Independently, the term of the agreement would commence upon  the
          date that any person who  is not currently a control person  with
          respect to the Company  acquires, or enters into an  agreement to
          acquire,  control of  the  Company, directly  or indirectly,  and
          would end on the last day of the twelfth month next following the
          date  on which the employee receives notice of the termination of
          his   employment  with   the  Company   or  the   life  insurance
          subsidiaries of the Company.

          During  the term of the agreement, the employee would be entitled
          to perform all of the duties of the position or positions held by
          the employee with the Company and all subsidiaries of the Company
          on the date  immediately preceding the  commencement date of  the
          agreement.

          During  the term of the agreement, the employee would be entitled
          to an  annual rate  of compensation  which is  not less  than the
          annual  rate of compensation in effect as of the date immediately 
          preceding  the commencement  date of the  agreement.   During the
          term  of  the  agreement,  the  employee  would  be  entitled  to
          participate in  and benefit from  all employee benefit  plans and
          other  fringe  benefits  on the  same  basis  as  such plans  and
          benefits  are made available to other  executive personnel of the
          Company.

          The agreement may  be terminated by the Company only in the event
          that the employee  is guilty of theft of property  of the Company
          or commits a  wrongful act  which has a  material adverse  effect
          upon the  business of the  Company and with respect  to which the
          employee  would  not be  entitled  to  indemnification under  the
          provisions  of the  Bylaws of  the Company  in  effect as  of the
          commencement  date of the agreement.   The employee may terminate
          the agreement uponthirty daysadvance written noticeto theCompany.

          Item 12.  Security Ownership of Certain Beneficial Owners and
                    Management

          The  following table presents information as of March 20, 1996 as
          to  all  persons  who, to  the  knowledge  of  the Company,  were
          beneficial  owners of  five (5%)  percent or  more of  the Common
          Stock of the Company.  

                                             Amount and
                                              Nature of         Percent of
          Name and Address               Beneficial Ownership     Class    

          Financial Industries Corp.
          701 Brazos, Suite 1400                       1              6
          Austin,  TX   78701..................3,668,501          62.35%

          Roy F. Mitte
          701 Brazos, Suite 1400                     2,3              6
          Austin,  TX   78701..................3,894,214          64.85%

          Investors Life Insurance Company 
            of North America
          701 Brazos, Suite 1400                       4              6
          Austin, TX  78701..................... 334,960           8.01%

          InterContinental Life Insurance 
            Company
          701 Brazos, Suite 1400                       5               6
          Austin, TX 78701...................... 281,560            6.73%

          1    Includes 1,966,346 shares  of the Company's stock  presently
               owned  and an option to  purchase up to  1,702,155 shares of
               the Company's authorized but  unissued Common Stock which is
               the balance  of the  option granted to  Financial Industries
               Corporation  ("FIC") by the Company in December, 1985.  This
               option may be  exercised by FIC at  any time at  an exercise
               price  equal to  the  average bid  prices  of the  Company's
               Common Stock over the six-month period immediately preceding 
               such exercise.

          2    As  of March 20, 1996 Mr. Mitte owned directly 25,000 shares
               of the Company's stock and had an option to purchase 121,500
               shares  at an exercise  price of $1 per  share. Mr. Mitte is
               also  a Trustee  of the  Company's Employee  Stock Ownership
               Plan, of which 65,805  un-allocated shares are voted jointly
               by  him and  Mr. Grace  (see Note  (2), below).   Mr. Mitte,
               jointly with his wife Joann, also owns 373,304 common shares
               of   Financial   Industries   Corporation    ("FIC")   which
               constitutes 34.39 percent of the outstanding common stock of
               that company, and holds  the position of Chairman, President
               and Chief Executive Officer of FIC.

               Since FIC holds  a controlling interest in the  Company, Mr.
               Mitte's personal holdings in  the Company have been combined
               with  the holdings  of  FIC in  determining  the amount  and
               percentage  of  Mr.  Mitte's  beneficial  ownership  of  the
               Company.

          3    Includes 13,408  shares  allocated to  Mr.  Mitte's  account
               under the Employee Stock Ownership Plan.

          4    Represents 281,560  shares owned  by ILIC and  53,400 shares
               owned directly by  Investors-NA.  ILIC  is a life  insurance
               company subsidiary of Investors-NA.  All of these shares are
               treated as treasury shares.

          5    All are directly owned  by ILIC and are treated  as treasury
               shares.

          6    Assumes that outstanding stock options or warrants available
               to other persons have not been exercised.

          The  following table contains information as of March 15, 1995 as
          to the Common  Stock of  the Company beneficially  owned by  each
          director,  nominee and  executive  officer and  by all  executive
          officers   and  directors  of  the  Company  as  a  group.    The
          information  contained in  the  table has  been  obtained by  the
          Company  from  each director  and  executive  officer except  for
          information known to  the Company.   Except as  indicated in  the
          notes to the table,  each beneficial owner has sole  voting power
          and  sole investment power as  to the shares  listed opposite his
          name.  

                              Amount and Nature of          Percent of
          Name                Beneficial Ownership            Class   

          W. Lewis Gilcrease       4,040                         *
          James M. Grace(1)      124,459(2)(3)(4)              2.95%   
          Richard A. Kosson          200                         * 
          Roy F. Mitte(1)      3,894,214(2)(4)                64.85%
          Donald Shuman              450                         *
          Eugene E. Payne(1)      51,796(3)(4)                 1.23% 
          Joseph F. Crowe(1)      37,541(3)(4)                   *
          Theodore A. Fleron      13,162(4)(5)                   *      
          Thomas C. Richmond      14,528(4)(5)                   *
          Steven P. Schmitt       11,837(4)(5)                   *
          Roger H. Hamm              -0-                         *

          All Executive 
          Officers and 
          Directors as a 
          group, all of 
          whom are listed
          above                4,086,422(1)(2)(3)(4)(5)       66.22%

          * Less than 1%

          (1)  Is an executive officer  and/or director of FIC which  as of
               March 20,  1996 beneficially  owned 3,668,501 shares  of the
               Company's  Common Stock (including option rights to purchase
               1,702,155  shares of  the  Company).    In addition  to  the
               shareholdings of Mr. Mitte  in FIC (see Note 2,  above), Mr.
               Grace owns 1,120 shares of FIC Common Stock.

          (2)  379,738 shares of the Company's Common Stock are held by the
               Trustees  of the  Company's  Employee  Stock Ownership  Plan
               ("ESOP")  of  which 65,805  shares  are  unallocated to  any
               participant's  account.   Messrs.  Grace and  Mitte are  the
               trustees  of  the ESOP  and are  entitled  to vote  such un-
               allocated shares.   The ESOP participants have  the right to
               direct the  voting of  shares allocated to  their respective
               accounts.  Beneficial ownership of these unallocated  shares
               is disclaimed by Messrs.  Grace and Mitte.  The  same 65,805
               shares are included in  the above table for each  of Messrs.
               Grace and  Mitte as  required for technical  compliance with
               the definition  of beneficial  ownership promulgated by  the
               Securities and Exchange Commission, and are counted once for
               purposes of executive officers and directors as a group.

          (3)  Includes  30,000 shares  issuable upon  exercise of  options
               granted under the Incentive Stock Option Plan during 1987 to
               Mr.  Grace at a price  of $3.54 (as  adjusted) per share and
               12,000  shares  issuable  upon exercise  of  options granted
               under the Non-Qualified Stock Option Plan during 1988 to Mr.
               Grace at a  price of $3.33 (as  adjusted) per share, all  of
               which are currently available for exercise.  Includes 20,000
               shares issuable  upon exercise of options  granted under the
               Incentive Stock  Option Plan and 6,000  shares issuable upon
               exercise of options  granted under  the Non-Qualified  Stock
               Option Plan during 1988 to Dr. Payne at a price of $3.33 (as
               adjusted) per  share, all  of which are  currently available
               for exercise.  Includes 30,000 shares issuable upon exercise
               of  options granted under the Incentive Stock Option Plan to
               Mr. Crowe during 1991 at a  price of $8.75 per share,  which
               are currently available for exercise. 

          (4)  Includes shares beneficially acquired  through participation
               in  the Company's  ESOP and/or  the Employee  Stock Purchase
               Plan, which are group plans for eligible employees.

          (5)  Includes  6,000  shares issuable  upon  exercise  of options
               granted  under the  Non-Qualified Stock  Option  Plan during
               1988  to each of Messrs.  Fleron, Richmond and  Schmitt at a
               price of $3.33 (as adjusted)  per share, which are currently
               exercisable.

          Item 13.  Certain Relationships and Related Transactions
                    with Management

          The  obligations of  the Company  under the  New Senior  Loan are
          guaranteed  by FIC.  FIC  presently owns 1,966,346  shares of the
          company's  Common  Stock,  constituting  47.03%  of  such  shares
          outstanding, and holds options to acquire an additional 1,702,155
          shares  at the average bid  price of such  shares during the six-
          month period  preceding the  date of any  such purchase.   In the
          event that such  options were  to be fully  exercised, the  total
          number  of the  Company's shares  owned by  FIC would  constitute
          62.35% of the outstanding shares of the Company's Common Stock.
           
          In May  1989, the Board of Directors of ILCO granted Roy F. Mitte
          the right  to borrow up to  $650,000 from ILCO to  be used solely
          for the purchase of FIC common stock pursuant to Mr. Mitte's then
          existing options.  A principal purpose of said loan was to enable
          Mr. Mitte to  maintain his  equity position in  FIC, as  required
          under  the terms  of  the  lending  agreements  entered  into  in
          connection with the purchase of the Investors Life Companies (see
          "Acquisition of Investors Life Companies").  Said loan, which was
          exercised on June 1, 1989, carried no interest and was payable in
          five years.   The loan was paid  in full in  1994.  See Item  11.
          Executive Compensation.

          When it acquired Austin Centre, Investors-NA leased  the hotel to
          FIC Realty Services,  Inc. ("FIC Realty"),  a subsidiary of  FIC,
          pursuant to which FIC Realty pays monthly rent to Investors-NA in
          an amount  equal to 95% of the net operating profits of the hotel
          for  the preceding month (excess  of all hotel  revenues over all
          hotel  expenses,  including  insurance,  utilities  and  property
          taxes). Any net operating loss for a month is carried forward and
          deducted  from the net operating  profit for the  next month that
          has such  a profit.   During 1995 FIC  Realty paid  $1,991,356 of
          rent to  Investors-NA  pursuant to  this  lease. FIC  Realty  has
          delegated the management of the hotel to an unrelated third party
          pursuant  to a management agreement, but FIC Realty bears most of
          the economic risks  in operating the hotel.  As  an inducement to
          FIC  Realty's  agreeing to  bear  those  risks, Investors-NA  has
          agreed to provide funds to pay expenses in operating the hotel to
          the  extent  that  the cash  flow  from  such  operations is  not
          sufficient to do so.

          Alcoholic  beverages had been sold  at the hotel  by an unrelated 
          third party  pursuant to  a lease it  had with  FIC Realty  until
          September 30,  1994.  Commencing  October 1, 1994,  all alcoholic
          beverages   sales  have   been  conducted   by  Atrium   Beverage
          Corporation ("Atrium Beverage"), a  new subsidiary of FIC Realty.
          Atrium  Beverage subleases from FIC Realty space in the hotel for
          the  storage, service and sale of alcoholic beverages pursuant to
          which Atrium Beverage pays monthly rent to FIC Realty of $12,500.
          The sublease  provides that  the rent  paid during  each calendar
          year  will  be reduced  to the  extent  necessary to  insure that
          Atrium Beverage's  net operating  profit from  alcoholic beverage
          sales is not less than 5%  of its gross receipts from such sales.
          Atrium Beverage and FIC  Realty are also parties to  a management
          agreement whereby  FIC Realty manages Atrium Beverage's alcoholic
          beverage  operations at the hotel for a  monthly fee equal to 28%
          of the  gross receipts  from alcoholic beverages  sales.   During
          1995, Atrium Beverage  paid FIC Realty  rent and management  fees
          totalling $319,815.  All of that amount was included in the hotel
          revenues  of  FIC  Realty  for purposes  of  determining  its net
          operating profits under the hotel lease agreement with Investors-
          NA.

          Investors-NA  entered into  a management  agreement in  September
          1991  with FIC  Property Management,  Inc. ("FIC  Management"), a
          subsidiary of FIC, whereby it appointed FIC Management to manage,
          lease  and operate  the office  tower, retail  areas, underground
          parking garage and common areas of Austin Centre.  FIC Management
          is paid fees in an amount equal to 5% of the net operating profit
          that Investors-NA receives from the properties managed and leased
          by FIC Management. During  1995, Investors-NA  paid  $130,760  of
          fees to FIC Management under this agreement.

          As part  of  the financing  arrangement  for the  acquisition  of
          Family Life Insurance Company, Family Life Corporation ("FLC"), a
          subsidiary of  FIC, entered  into a  senior loan  agreement under
          which $50  million was provided by a group of banks.  The balance
          of  the financing  consisted of a  $30 million  subordinated note
          issued by  FLC to Merrill  Lynch Insurance Group,  Ins. ("Merrill
          Lynch") and  $14 million  borrowed by  another subsidiary  of FIC
          from  an affiliate  of Merrill  Lynch and  evidenced by  a senior
          subordinated  note in the principal  amount of $12  million and a
          junior  subordinated note in  the principal amount  of $2 million
          and $25  million lent  by two  insurance company subsidiaries  of
          ILCO. The latter amount  was represented by a $22.5  million loan
          from  Investors-NA  to  FLC  and  a  $2.5 million  loan  provided
          directly to FIC  by Investors-CA.   In addition  to the  interest
          provided under those  loans, Investors-NA  and Investors-CA  were
          granted  by  FIC non-transferable  options  to  purchase, in  the
          amounts proportionate to their respective loans, up to a total of
          9.9 percent of shares of FIC's  common stock at a price of $10.50
          per share, equivalent  to the then current market  price, subject
          to  adjustment to prevent dilution.   The options  will expire on
          June 12, 1998 if not previously exercised. 

          On July  30, 1993, the subordinated indebtedness  owed to Merrill
          Lynch  and its affiliate was  prepaid.  $38  million plus accrued
          interest  was  paid  to  retire the  indebtedness,  which  had  a
          principal balance of approximately $50 million on July 30, 1993.

          The primary source of  the funds used to prepay  the subordinated
          debt was new  subordinated loans totalling $34.5 million that FLC
          and another  subsidiary of FIC  obtained from Investors-NA.   The
          principal  amount of the new subordinated debt is payable in four
          equal  annual installments in 2000, 2001, 2002 and 2003 and bears
          interest at an annual  rate of 9%.   The other  terms of the  new
          debt are substantially  the same  as those of  the $22.5  million
          subordinated loans  that Investors-NA had previously  made to FLC
          and that continue to be outstanding.

          The Company believes that this restructuring of subordinated debt
          should  enhance the value of the loans that Investors-NA has made
          to  FIC's subsidiaries and the options it holds to purchase FIC's
          stock.

          The Company reimbursed FIC for  rental expenses and certain other
          operating expenses incurred during 1995 on behalf of the Company.
          The amount of such reimbursement was approximately $830,000.

          Pursuant  to a  data processing  agreement with  a  major service
          company, the data processing needs  of ILCO's and FIC's insurance
          subsidiaries were  provided at a central  location until November
          30,  1994.    Commencing December  1,  1994,  all  of those  data
          processing needs are provided  to ILCO's and FIC's Austin,  Texas
          and Seattle, Washington facilities by FIC Computer Services, Inc.
          ("FIC Computer"),  a new subsidiary  of FIC.   Each of  FIC's and
          ILCO's insurance subsidiaries has  entered into a data processing
          agreement with  FIC Computer  whereby FIC Computer  provides data
          processing services  to each  subsidiary for  fees equal to  such
          subsidiary's  proportionate share of  FIC Computer's actual costs
          of  providing those  services to  all of  the subsidiaries.   The
          Company's insurance subsidiaries paid $1,655,486 and Family  Life
          paid  $779,052  to  FIC  Computer for  data  processing  services
          provided during December 1995.

          In 1995,  Investors-NA entered into a  reinsurance agreement with
          Family  Life pertaining  to universal  life insurance  written by
          Family  Life.   The reinsurance  agreement is  on  a co-insurance
          basis and applies to all covered business with effective dates on
          and after January 1,  1995.  The  agreement applies to only  that
          portion  of the  face amount  of the  policy  which is  less than
          $200,000;  face amounts  of  $200,000 or  more  are reinsured  by
          Family Life with a third party reinsurer.  

          Roy F.  Mitte serves as  Chairman, President and  Chief Executive
          Officer of  both FIC and  ILCO.   James M. Grace  serves as  Vice
          President, Treasurer and Director of both companies and Secretary
          of FIC, and Messrs. Payne and  Crowe serve as Vice Presidents and
          Directors of  both  companies.   Mr. Roy  Mitte holds  beneficial 
          ownership  of  34.39%  of  the  outstanding  shares  of  FIC (see
          "Security   Ownership   of    Certain   Beneficial   Owners   and
          Management"). 

                                       Part IV

          Item 14.  Exhibits, Financial Statements, Schedules, and
                    Reports on Form 8-K

          (a)  The  following documents  have been  filed as  part  of this
               Report.

          1.   Financial Statements as identified in Item 8 above.

          2.   Financial Statement Schedules  Required to be filed  by
               Item 8.

               a.   Schedule I-Summary of Investments  other than
                    Investments in Related Parties.
               b.   Schedule  II-Amounts Receivable  from Related
                    Parties,    Underwriters,    Promoters    and
                    Employees other than Related Parties.
               c.   Schedule  III-Condensed Financial  Statements
                    of Registrant.
               d.   Schedule VI-Reinsurance Ceded and Assumed.

          3.   Exhibits filed with this  report or incorporated herein
               by  reference are as listed in the Index to Exhibits on
               page E-1.

               (b)  Reports on Form 8-K:

                    No reports on Form  8-K were filed during the
                    last  quarter  of   the  fiscal  year   ended
                    December 31, 1995. 


                                      SIGNATURES

          Pursuant  to the  requirements of  Section 13  or 15  (d)  of the
          Securities Exchange Act of  1934, the Registrant has  duly caused
          this  report to  be  signed on  its  behalf by  the  undersigned,
          thereunto duly authorized.

                          InterContinental Life Corporation
                                     (Registrant)

          By:  /s/ Roy F. Mitte              By:/s/ James M. Grace         
               Roy F. Mitte, Chairman of        James M. Grace, Treasurer,
               the Board, President and         Principal Accounting
               Chief Executive Officer          and Financial Officer

          Pursuant to the  requirements of the  Securities Exchange Act  of
          1934,  this report has been signed below by the following persons
          on  behalf of the Registrant  and in the  capacities indicated on
          March  27, 1996.

          /s/ Roy F. Mitte              
          Roy F. Mitte, Director

          /s/ James M. Grace                              
          James M. Grace, Director

          /s/ Eugene E. Payne                           
          Eugene E. Payne, Director

          /s/ Joseph F. Crowe              
          Joseph F. Crowe, Director

          /s/ Theodore A. Fleron        
          Theodore A. Fleron, Director

          /s/ Roger H. Hamm             
          Roger H. Hamm, Director

          /s/ Thomas C. Richmond          
          Thomas C. Richmond, Director

          /s/ Steven P. Schmitt         
          Steven P. Schmitt, Director

          /s/ W. Lewis Gilcrease        
          W. Lewis Gilcrease, Director

          /s/ Richard A. Kosson         
          Richard A. Kosson, Director
                           
          /s/ Donald Shuman             
          Donald Shuman, Director 



                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                          FORM 10-K--ITEM 14 (a)(1) and (2)
                             LIST OF FINANCIAL STATEMENTS
                                  TABLE OF CONTENTS
                                                
          The    following    consolidated    financial    statements    of
          InterContinental Life  Corporation and Subsidiaries  are included
          in Item 8:

          Report of Independent Accountants.............................F-2

          Consolidated Balance Sheets, December 31, 1995 and 1994.......F-3

          Consolidated Statements of Income, for the years ended
           December 31, 1995, 1994 and 1993.............................F-5

          Consolidated Statements of Changes in Shareholders' Equity,
           for the years ended December 31, 1995, 1994 and 1993.........F-7

          Consolidated Statements of Cash Flows, for the years ended
           December 31, 1995, 1994 and 1993............................F-10

          Notes to Consolidated Financial 

          Statements...................................................F-13

          The following consolidated financial statement schedules of      
          InterContinental Life Corporation and Subsidiaries are included:

          Schedule I   - Summary of Investments Other Than Investments in  
           Related Parties.............................................F-43

          Schedule II  - Amounts Receivable From Related Parties and
           Underwriters, Promoters, and Employees Other Than Related       

          Parties......................................................F-44

          Schedule III - Condensed Financial Statements of                 

          Registrant...................................................F-46

          Schedule VI  - Reinsurance Ceded and Assumed.................F-50

          All other schedules for which provision is made in the applicable
          accounting regulations of the  Securities and Exchange Commission
          are  not  required under  the  related  instructions  or are  not
          applicable, and therefore have been omitted.  



                          REPORT OF INDEPENDENT ACCOUNTANTS

          To the Board of Directors and Shareholders of
          InterContinental Life Corporation


          In our  opinion, the consolidated financial  statements listed in
          the  index  appearing under  Item 14(a)(1)  and  (2) on  page F-1
          present fairly, in all  material respects, the financial position
          of  InterContinental Life Corporation  and its  subsidiaries (the
          Company) at December 31, 1995 and  1994, and the results of their
          operations  and their cash  flows for each of  the three years in
          the period ended December 31,  1995, in conformity with generally
          accepted accounting principles.   These financial  statements are
          the   responsibility   of    the   Company's   management;    our
          responsibility  is  to  express  an opinion  on  these  financial
          statements based on our audits.  We conducted our audits of these
          statements  in  accordance   with  generally  accepted   auditing
          standards which require  that we  plan and perform  the audit  to
          obtain  reasonable   assurance   about  whether   the   financial
          statements are free  of material misstatement.  An audit includes
          examining, on a  test basis, evidence supporting  the amounts and
          disclosures in the financial statements, assessing the accounting
          principles used and significant estimates made by management, and
          evaluating  the overall  financial  statement  presentation.   We
          believe  that  our audits  provide  a  reasonable basis  for  the
          opinion expressed above.  

          As discussed in  Note 1,  the Company adopted  the provisions  of
          Statement of Financial Accounting  Standards No. 109  "Accounting
          for Income Taxes" as of January 1, 1993. 


          /s/Price Waterhouse

          Price Waterhouse LLP
          Dallas, Texas
          March 27, 1996



                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS
                              (in thousands of dollars)
                                                       December 31, 
                    ASSETS                             1995        1994   

          Investments:
           Fixed maturities, at
             amortized cost (market value
             approximates $14,277 and $24,175)      $   14,420  $   23,776
           Fixed maturities available for sale,
             at market value (amortized cost
             $463,701 and $388,263)                    483,606     357,084
           Equity securities, at market value
            (cost approximates $368 and $414)            1,559       1,243
           Policy loans                                 53,656      48,096
           Mortgage loans                               14,836      17,055
           Invested real estate and other invested
             assets                                     15,467       5,580
           Short-term investments                       85,994      94,841
               Total investments                       669,538     547,675

          Cash and cash equivalents                      6,537       5,563

          Notes receivable from affiliates              61,224      60,759

          Accrued investment income                      8,190       8,495

          Agent advances and other receivables          16,591      19,778

          Reinsurance receivables                       14,474      14,066

          Property and equipment, net                    4,460       4,418

          Real estate occupied by the Company, net      36,169      34,418

          Deferred policy acquisition costs             24,926      25,282

          Present value of future profits of
           acquired businesses                          48,606      46,153

          Deferred financing costs                       1,597       2,462

          Other assets                                   6,859       6,506

          Separate account assets                      416,122     373,419

               Total Assets                         $1,315,293  $1,148,994


                    The accompanying notes are an integral part of the
                          consolidated financial statements. 


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS, Continued
                              (in thousands of dollars)
                                                       December 31,
          LIABILITIES AND SHAREHOLDERS' EQUITY         1995        1994   

          Liabilities:
          Policy liabilities and contractholder
           deposit funds:
          Future policy benefits                    $  128,265  $  117,761
          Contractholder deposit funds                 544,621     490,232
          Unearned premiums                             10,669      12,203
          Other policy claims and benefits payable       6,125       8,621
                                                       689,680     628,817
          Other policyholders' funds                     2,700       2,669
          Senior loans                                  59,385      66,585
          Deferred federal income taxes                 25,462       2,662
          Other liabilities                             27,105      24,781
          Separate account liabilities                 413,876     371,173
            Total Liabilities                        1,218,208   1,096,687

          Commitments and Contingencies
          (Note 13)             

          Redeemable preferred stock:
          Class A Preferred, $1 par value,
           5,000,000 shares authorized, issued           5,000       5,000
          Class B Preferred, $1 par value,
           15,000,000 shares authorized, issued         15,000      15,000
          Redeemable Preferred Stock held               20,000      20,000
           in treasury                                 (20,000)    (20,000)
                                                           -0-         -0-     
          Shareholders' equity:

          Common stock, $.22 par value,
           10,000,000 shares authorized;
           5,166,239 and 5,107,239 shares issued,
           4,175,329 and 4,116,329 shares out-
           standing in 1995 and 1994, respectively       1,137       1,124
          Additional paid-in capital                     3,521       2,854
          Net unrealized appreciation of
           equity securities                               748         568
          Net unrealized gain (loss) on investments
           in fixed maturities available for sale       12,938     (20,266)
          Retained earnings                             81,759      71,045 
          Common treasury stock, at cost,              100,103      55,325
           990,910 shares                               (3,018)     (3,018)
          Total shareholders' equity                    97,085      52,307
          Total Liabilities and Shareholders'
           Equity                                   $1,315,293  $1,148,994


                 The accompanying notes are an integral part of the 
                         consolidated financial statements.  


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF INCOME
                              (in thousands of dollars)
                             (except for per share data)
                                                 Year Ended December 31,
                                                1995      1994      1993        

          Revenues:
          Premiums                            $ 11,694  $ 14,317  $ 16,114
          Net investment income                 64,781    57,553    57,548
          Earned insurance charges              42,324    39,370    38,554
          Other                                  3,591     3,602     5,627
                                               122,390   114,842   117,843
          Benefits and expenses:
          Policyholder benefits and expenses    42,639    41,243    30,639
          Interest expense on contractholder
           deposit funds                        32,375    29,592    34,010
          Amortization of present value of
           future profits of acquired
           businesses                            6,211     5,393     6,455
          Amortization of deferred policy
           acquisition costs                     3,929     4,116     2,889
          Operating expenses                    15,016    13,574    20,793
          Interest expense                       5,737     5,224     5,739
                                               105,907    99,142   100,525

          Income from operations                16,483    15,700    17,318

          Provision for federal income taxes:
           Current                                 945      (465)    2,818
           Deferred                              4,824     6,248     2,300 
                                                 5,769     5,783     5,118
          Net income before extraordinary
           item and cumulative effect of
           change in accounting principle       10,714     9,917    12,200

          Extraordinary Item:

          Cost of early extinguishment
           of debt, net of tax                     -0-       -0-    (6,253)

          Net income before cumulative
           effect of change in accounting
           principle                            10,714     9,917     5,947

          Cumulative effect of change
           in accounting principle                 -0-       -0-    (2,600)

          Net Income                          $ 10,714  $  9,917  $  3,347

                  The accompanying notes are an integral part of the
                          consolidated financial statements. 


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF INCOME
                              (in thousands of dollars)
                             (except for per share data)

                                                Year Ended December 31,
                                                1995      1994      1993  

          Net income per share (Note 15):

          Common stock and common stock
           equivalents                         5,389      5,378     5,858

          Net income per share available to
           common shareholders before
           extraordinary item and cumulative
           effect of change in accounting
           principle                          $  2.11   $  1.93   $  2.20

          Extraordinary Item:

          Cost of early extinguishment
           of debt, net of tax                    -0-       -0-     (1.07)

          Net income per share before
           cumulative effect of change
           in accounting principle               2.11      1.93      1.13

          Cumulative effect of change
           in accounting principle                -0-       -0-      (.44)

          Net income per share
           of common stock                    $  2.11   $  1.93   $   .69  


                  The accompanying notes are an integral part of the
                          consolidated financial statements. 


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                              (in thousands of dollars)

                                                               Additional
                                        Common Stock           Paid-in
                                     Shares       Amount       Capital   
          Balance at December 31,
            1992                      5,100       $1,122        $2,761
          Net income
           Change in net unrealized
            appreciation of equity
            securities
           Change in net unrealized
            loss on investments
            in fixed maturities
            available for sale
           Cost of options acquired     
           Options exercised              2            1            25

          Balance at December 31,
            1993                      5,102        1,123         2,786
           Net Income
           Change in net unrealized
            appreciation of equity
            securities
           Change in net unrealized
            loss on investments
            in fixed maturities
            available for sale
           Options exercised              5            1            68

          Balance at December 31,
            1994                      5,107        1,124         2,854
           Net Income
           Change in net unrealized
            appreciation of equity
            securities
           Change in net unrealized
            gain on investments 
            in fixed maturities
            available for sale
          Options exercised             59            13           667
            
          Balance at December 31,
            1995                     5,166        $1,137        $3,521

                 The accompanying notes are an integral part of these
                          consolidated financial statements. 


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                    (in thousands)
                                                  Net Un-
                                                  realized
                                                  Gain  (Loss)
                                                  on Invest-
                                     Net Un-      ments     in
                                     realized     Fixed
                                     Appreciation Maturities
                                     of Equity    Available    Retained
          Balance at December 31,    Securities   For Sale     Earnings
            1992                     $  1,156     $   12,122    $ 65,793
           Net income                                              3,347
           Change in net unrealized
            appreciation of equity
            securities                   (211)
           Change in net unrealized
            loss on investments 
            in fixed maturities
            available for sale                        (5,799)
           Cost of options acquired                               (8,012)
           Options exercised                                              

          Balance at December 31,
            1993                          945          6,323      61,128 
           Net Income                                              9,917
           Change in net unrealized
            appreciation of equity
            securities                   (377)
           Change in net unrealized
            loss on investments 
            in fixed maturities
            available for sale                      (26,589)
           Options exercised                                            

          Balance at December 31,
            1994                          568       (20,266)      71,045 
           Net Income                                             10,714
           Change in net unrealized
            appreciation of equity
            securities                    180
           Change in net unrealized
            gain on investments 
            in fixed maturities
            available for sale                       33,204 
           Options exercised                                            
            
          Balance at December 31,
            1995                     $    748     $  12,938     $ 81,759 

                 The accompanying notes are an integral part of the 
                          consolidated financial statements. 


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                    (in thousands)
                                                  
                                     Common       Total
                                     Treasury     Shareholders
                                     Stock        Equity   
          Balance at December 31,
            1992                     $ (3,018)    $ 79,936
          Net income                                 3,347
           Change in net unrealized
            appreciation of equity
            securities                                (211)
           Change in net unrealized
            loss on investments 
            in fixed maturities
            available for sale                      (5,799)
           Cost of options acquired                 (8,012)
           Options exercised                            26

          Balance at December 31,
            1993                       (3,018)      69,287
           Net Income                                9,917
           Change in net unrealized
            appreciation of equity
            securities                                (377)
           Change in net unrealized
            loss on investments 
            in fixed maturities
            available for sale                     (26,589)
           Options exercised                            69

          Balance at December 31,
            1994                       (3,018)      52,307
           Net Income                               10,714
           Change in net unrealized
            appreciation of equity
            securities                                 180
           Change in net unrealized
            gain on investments 
            in fixed maturities
            available for sale                      33,204
           Options exercised                           680
            
          Balance at December 31,
            1995                     $ (3,018)    $ 97,085

                 The accompanying notes are an integral part of the 
                          consolidated financial statements. 


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (in thousands of dollars)

                                                 Year Ended December 31, 

          CASH FLOWS FROM OPERATING             1995      1994      1993  
           ACTIVITIES

          Net Income                          $ 10,714  $  9,917  $  3,347

           Adjustments to reconcile net
           income to net cash provided by
           (used in) operating activities:
          Cost of early extinguishment of 
           debt                                    -0-       -0-     7,136
          Amortization of present value of
           future profits of acquired
           businesses                            6,211     5,393     6,455
          Amortization of deferred policy
           acquisition costs                     3,929     4,116     2,889
          Depreciation                           2,610       268     1,938
          Net gain on sales of investments        (418)     (695)   (8,490)
          Financing costs amortized(deferred)      865     1,411     4,176 
          Amortization of deferred gain on
           sale of real estate                    (110)     (151)     (153)

          Changes in assets and liabilities:

          (Increase) Decrease in accrued     
           investment income                     1,759      (698)       91
          Decrease (Increase) in agent
           advances and  other receivables       4,656    (2,467)   (7,566)
          Policy acquisition costs deferred     (3,573)   (3,597)   (4,211)
          Decrease in policy liabilities 
           and contractholder deposit funds    (27,753)  (17,685)     (863)
          Increase (Decrease) in other policy
           holders' funds                         (349)       78      (241)
          Increase (Decrease) in other 
           liabilities                             911      (707)   (3,459)
          Increase (Decrease) in deferred 
           federal income taxes                  4,696    (8,124)    3,548 
          Decrease (Increase) in other assets    7,527    (1,037)   (1,030)
          Other, net                            (1,388)   (1,371)   (3,298)
          Net cash provided by (used in)
           operating activities                 10,287   (15,349)      269


                 The accompanying notes are an integral part of the 
                          consolidated financial statements. 


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (in thousands of dollars)


                                                 Year Ended December 31, 

          CASH FLOWS FROM INVESTING              1995      1994     1993  
          ACTIVITIES


          Purchase of insurance subsidary      (17,492)      -0-       -0-
          Investments purchased                (38,781) (130,710) (190,958)
          Proceeds from sales and maturities
           of investments                       50,181    97,019   256,327
          Net change in short-term 
           investments                           8,847    68,505    (2,706)
          Purchases & retirements of         
            equipment                           (4,403)     (655)     (420)
          Notes receivable from affiliates        (465)     (413)  (34,848)
          Net cash (used in) provided by 
           investing activities                 (2,113)   33,746    27,395


          CASH FLOWS FROM FINANCING 
          ACTIVITIES
                                                                          
          Issuance of senior loan               15,000       -0-   110,000
          Repayment of debt                    (22,200)  (17,415) (116,325)
          Cost of early extinguishment of 
           debt                                    -0-       -0-    (7,136)
          Deferred financing cost from 
           issuance of senior loan                 -0-       -0-    (5,717)
          Cost of repurchase of warrants           -0-       -0-    (8,012)
          Net cash used in financing 
           activities                           (7,200)  (17,415)  (27,190)
          Net increase in cash 
           and cash equivalents                    974       982       474
          Cash and cash equivalents, 
           beginning of year                     5,563     4,581     4,107

          Cash and cash equivalents, 
           end of year                        $  6,537  $  5,563  $  4,581


                 The accompanying notes are an integral part of the 
                          consolidated financial statements.


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES 
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (in thousands of dollars)


          Supplemental Cash Flow Disclosures:
                                                Year Ended December 31,
                                            1995          1994         1993


          Income taxes paid              $     560    $   2,675    $  4,955

          Interest paid                  $   5,905    $   4,733    $  6,303


          Supplemental Schedule of Non-Cash Investing Activities:

          The Company  purchased the  outstanding capital  stock of  a life
          insurer in the first quarter of 1995 for a cash purchase price of
          $17.1  million net  of post closing  adjustments.   This purchase
          resulted in  the Company  receiving tangible assets  and assuming
          liabilities as follows:

               Assets                             $99,642,000
               Liabilities                        $90,816,000


                 The accompanying notes are an integral part of the 
                          consolidated financial statements.


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

          1. Organization and Summary of Significant Accounting Policies

          Organization

          InterContinental  Life Corporation  (ILCO  or  the "Company")  is
          principally  engaged, through its  subsidiaries, in administering
          existing  portfolios  of  individual  and group  life  insurance,
          credit  life   and  disability  insurance  policies  and  annuity
          products.  The Company's  insurance subsidiaries are also engaged
          in  the business  of marketing  and underwriting  individual life
          insurance,  credit  life  and  disability  insurance  and annuity
          products in 49 sates and the District of Columbia.  Such products
          are marketed through  independent, non-exclusive general  agents.
          The  Company  also    administers  an  in-force  book  of  health
          insurance business.

          Principles of Consolidation

          The  consolidated financial  statements include  the accounts  of
          InterContinental  Life  Corporation and  its  subsidiaries.   All
          significant  intercompany  accounts  and  transactions  have been 
          eliminated. 

          Basis of Presentation

          The financial  statements have  been prepared in  conformity with
          generally  accepted  accounting  principles  which   differ  from
          statutory   accounting   principles   required    by   regulatory
          authorities   for   the    Company's   insurance    subsidiaries.
          Significant accounting policies followed by the Company are:

          Investments

          The  Company's general  investment  philosophy is  to hold  fixed
          maturity  securities until maturity.   However,  fixed maturities
          may be sold  prior to the maturity dates in  response to changing
          market  conditions, duration  of liabilities,  liquidity factors,
          interest   rate   movements   and   other   investment   factors.
          Accordingly, consistent  with the  requirements  of Statement  of
          Financial  Accounting  Standards No.115  "Accounting  for Certain
          Investments in Debt and  Equity Securities" ("FAS 115") which  is
          effective  for fiscal  years beginning  after December  15, 1993,
          most fixed  maturity investments are classified  as available for
          sale and are carried at market value.  All other fixed maturities
          are  carried at  the lower  of amortized  cost or  net realizable
          value as management has  the positive intent and the  Company has
          the ability  to hold  such investments  to maturity.   Unrealized
          gains  and  losses  on  securities  available  for sale  are  not
          recognized in  earnings but are reported as  a separate component
          of equity, net of the income tax effect.

          Premiums and  discounts  on  collateralized  mortgage obligations
          (CMOs) are amortized  over  the  estimated  redemption  period as
          opposed  to  the  stated  maturities.    An  adjustment  to   the
          investment  and investment  income is  booked on  a retrospective
          basis to reflect the amounts that would have existed had  the new
          effective yield been applied since the acquisition of the CMOs.

          Equity  securities are carried at market value.  Unrealized gains
          and losses on equity securities, net of deferred income taxes, if
          applicable,  are  reflected  directly  in  shareholders'  equity.
          Mortgage loans and policy loans are recorded  at unpaid balances.
          Real  estate is  carried at  cost less  accumulated depreciation,
          which is generally calculated using the straight-line method over
          20  to 40 years.  Accumulated depreciation on investments in real
          estate  is  $5,021,082 and  $4,463,255 at  December 31,  1995 and
          1994, respectively.  Short-term  investments are carried at cost,
          which approximates  market value, and generally  consist of those
          fixed maturities and  other investments that  are intended to  be
          held less than one year from the date of purchase.   

          Realized gains and losses on disposal of investments are included
          in net income.  The cost of investments sold is determined on the
          specific identification  basis, except for equity securities, for
          which the  first-in,  first-out  method is  employed.    When  an
          impairment of the value of an investment is considered other than
          temporary, the decrease  in value is reported in net  income as a
          realized investment loss and a new cost basis is established.    

          Cash and Cash Equivalents

          Short-term investments with maturities of three months or less at
          the time of purchase are reported as cash equivalents.

          Property and Equipment and Home Office Real Estate

          Property and equipment and  home office real estate is  stated at
          cost less accumulated depreciation.   Depreciation is  calculated
          using straight-line and accelerated methods over estimated useful
          lives of  10 to 33  years for buildings  and improvements  and 10
          years  for furniture and equipment.   Maintenance and repairs are
          charged to  expense when incurred.   Accumulated depreciation for
          property and equipment and home office real estate was $8,984,287
          and $6,931,956 at December 31, 1995 and 1994, respectively.

          Deferred Acquisition Costs

          The cost of acquiring new and renewal business, principally first
          year commissions and certain expenses of  the policy issuance and
          underwriting departments,  which  vary  with  and  are  primarily
          related  to the production of new and renewal business, have been
          deferred to the extent recoverable.  Acquisition costs related to
          universal life products are  deferred and amortized in proportion
          to the ratio of estimated annual gross profits to total estimated
          gross  profits   over  the  expected  lives   of  the  contracts.
          Acquisition costs related to  traditional life insurance business
          are  deferred and amortized over the premium paying period of the
          related policies.

          Present Value of Future Profits 

          The present  value of  future profits  of acquired  businesses is
          amortized over the premium paying period of  the related policies
          in proportion to the ratio of the annual premium revenue to total
          anticipated   premium  revenue   applicable  to   such  policies.
          Interest on  the unamortized  balance is  accreted at  rates from
          8.5% to 9%.

          For  interest-sensitive products,  these  costs are  amortized in
          relation  to  the  present  value,  using  the  current  credited
          interest rate, of expected gross profits of the policies over the
          anticipated coverage period. 

          Retrospective  adjustments of these amounts are made periodically
          upon the revision of estimates of current or future gross profits
          on  universal life-type products to  be realized from  a group of
          policies.   Recoverability of present  value of future profits is
          evaluated  periodically  by  comparing the  current  estimate  of
          future profits to the unamortized asset balances.

          Anticipated  investment  returns,  including realized  gains  and
          losses,  from  the   investment  of  policyholder  balances   are
          considered in  determining the  amortization of present  value of
          future profits acquired.

          Deferred Financing Costs

          Financing costs  associated with  the Company's Senior  Loan have
          been deferred and are being amortized over the borrowing  periods
          using the interest method.

          Separate Accounts

          Separate account assets, carried at market value, and liabilities
          represent   policyholder  funds  maintained  in  accounts  having
          specific investment objectives.  The net investment income, gains
          and losses  of these accounts, less  applicable contract charges,
          generally  accrue  directly  to  the policyholders  and  are  not
          included in the Company's statement of income. 

          Solvency Laws Assessments

          The  solvency  or  guaranty laws  of  most  states  in which  the
          Company's insurance  subsidiaries  do business  may  require  the
          Company's  insurance  subsidiaries  to  pay  assessments  (up  to
          certain  prescribed  limits)  to  fund  polichyholder  losses  or
          liabilities of insurance companies  that become insolvent.  These
          assessments may be deferred or  forgiven under most guaranty laws
          if they would  threaten an insurer's  financial strength and,  in
          certain instances,  may be  offset against future  premium taxes.
          The  Company's  insurance  subsidiaries  record  the expense  for
          guaranty  fund assessment from states  which do not allow premium
          tax  offsets in  the period  assessed.   The Company's  insurance
          subsidiaries  expensed  approximately   $241,692,  $192,371   and
          $206,965 in the  years ended  December 31, 1995,  1994 and  1993,
          respectively, as a result of such assessments.

          Policy Liabilities and Contractholder Deposit Funds

          Liabilities  for future  policy  benefits related  to traditional
          life  products are computed using the net level premium method or
          an   equivalent  actuarial   method.    Assumptions   for  future
          investment  yields   are   incorporated  in   these   liabilities 
          (principally  8% for  guaranteed premium products).   Assumptions
          for  mortality  and withdrawal,  based  on  industry and  Company
          experience  for  all  products, include  provisions  for possible
          unfavorable deviations.  The liability for future policy benefits
          for traditional life policies is graded to reserves stipulated by
          regulatory  authorities over a 30-year  period or the  end of the
          premium paying period, if less.

          Contractholder deposit funds  are liabilities for universal  life
          and  annuity products.    These liabilities  consist of  deposits
          received from customers and  accumulated net investment income on
          their fund balances, less administrative charges.  Universal life
          fund  balances are  also assessed  mortality charges.    The cash
          value benefit  for these  products is  based on  actual crediting
          rates, which are lower than assumed investment yields.

          Liabilities for  future policy benefits related to non-cancelable
          and  guaranteed  renewable  accident  and  health  contracts  are
          computed based  on industry and Company  experience and estimated
          future investment yields  ranging from  4 1/2% to  6%.   Unearned
          premium  reserves  for  credit   life  and  accident  and  health
          contracts are computed on  either the sum-of-the-year's digits or
          pro rata methods depending upon the type of coverage.

          Other policy claims and benefits payable 

          The  liability  for  other  policy claims  and  benefits  payable
          represents  management's estimate  of ultimate  unpaid losses  on
          claims  and  other  miscellaneous  liabilities  to  policyholders
          reduced by amounts anticipated  to be recovered from reinsurance.
          Estimated  unpaid losses  on claims  are comprised  of  losses on
          claims  that  have been  reported  but  not yet  paid,  including
          estimates of additional development  of initial claims estimates,
          and claims that have been incurred but not yet reported (IBNR) to
          the Company. 

          The liability for  other policy  claims and  benefits payable  is
          subject to the impact of changes in claim severity, frequency and
          other  factors.    Although  there  is  considerable  variability
          inherent  in   such  estimates,  management  believes   that  the
          liability recorded is adequate.

          Revenue Recognition

          Premiums on  traditional life and health  products are recognized
          as revenue over the premium paying period when  due.  Credit life
          and health  insurance premiums  are recognized over  the contract
          period  on a pro  rata basis, or  the sum of  years digits basis.
          Benefits and expenses  are associated with earned premiums, so as
          to  result  in  recognition of  profits  over  the  lives of  the
          contracts. 

          Proceeds  from  investment-related  products and  universal  life
          products are recorded as liabilities when received.  Revenues for
          investment-related  products consist of contract charges assessed
          against  the  deposit  fund  values and  net  investment  income.
          Related benefit  expenses primarily consist  of interest credited
          to  the fund  values after deductions  for investment  and policy
          charges.   Revenues  for universal  life products consist  of net
          investment  income, mortality and  administration charges against
          deposits and  fund values and surrender  charges assessed against
          the fund values.  Related benefit expenses include universal life
          benefit  claims in excess of fund values and interest credited to
          universal life fund values.

          Net Income Per Share

          Net income per  share is based on the weighted  average number of
          shares of  common stock and common  stock equivalents outstanding
          during each year  and net  income increased by  the reduction  in
          interest expense caused by the assumed conversion of common stock
          equivalents.    There  are  no  significant  differences  between
          primary and fully diluted income per share amounts.

          Federal Income Taxes

          In February 1992, the Financial Accounting Standards Board (FSAB)
          issued Statement of Financial Accounting Standards (FAS) No. 109,
          "Accounting  for Income Taxes"  ("FAS 109").  The Company adopted
          FAS 109 on  a prospective basis effective  January 1, 1993.   FAS
          109  mandates  the  asset  and  liability  method  for  computing
          deferred income taxes.   Under this method, balance sheet amounts
          for deferred income taxes are computed based on the tax effect of
          the  temporary differences  between the  financial reporting  and
          federal  income tax basis of assets and liabilities using the tax
          rates which are  expected to  be in effect  when these  temporary
          differences are anticipated to reverse. 

          Under  FAS  109,  assets  acquired  and  liabilities  assumed  in
          purchase business  combinations  are assigned  their fair  values
          assuming  equal tax  basis and  deferred taxes  are  provided for
          lower or higher tax basis.  Under APB 11 (the previous accounting
          standard used by the Company to account for income taxes), values
          assigned to assets acquired  and liabilities assumed were net-of-
          tax.   In  adopting FAS  109, the  Company adjusted  the carrying
          amounts  of Investors-NA  which was  acquired in  1988.   Pre-tax
          income from operations for  the calendar year ended  December 31,
          1993 was not impacted. 

          Under FAS 109, as under APB 11, the Company will  disclose in its
          financial statements a  reconciliation between the  effective tax
          rate  and the  amount derived  by multiplying  pre-tax accounting 
          income by the currently enacted federal income tax rate.  

          As a  result of  adopting  FAS 109,  a charge  of $2,600,000  was
          recorded in 1993 relating to the cumulative effect of a change in
          accounting principle. 

          Use of Estimates

          The  preparation  of  financial  statements  in  conformity  with
          generally accepted accounting  principles requires management  to
          make estimates  and assumptions that affect  the reported amounts
          of assets and liabilities and disclosure of contingent assets and
          liabilities  at  the date  of  the financial  statements  and the
          reported amounts  of revenues  and expenses during  the reporting
          period.  Actual results could differ from those estimates.

          New Accounting Pronouncements:

          In  May 1993,  the  FASB  issued  FAS  No.  114,  "Accounting  by
          Creditors  for Impairment of a Loan",  effective for fiscal years
          beginning  after December 15, 1994.  This statement requires that
          impaired loans be  valued at  the present value  of the  expected
          future  cash flows  discounted at  the loan's  effective interest
          rate or,  as  a practical  expedient,  at the  loan's  observable
          market  price or the fair value of  the collateral if the loan is
          collateral dependent.  It  further amends FAS No. 5,  "Accounting
          for Contingencies," to require that all contractual principal and
          interest payments be considered  in determining the impairment of
          a loan.  The adoption of FAS No. 114 in January 1995 did not have
          a material impact on the Company's financial statements.

          In March 1995, the FASB  issued FAS No. 121, "Accounting  For the
          Impairmant of Long-Lived Assets and  For Long-lived Assets to  be
          Disposed of."  This Statement requires that long-lived assets and
          certain identifiable intangibles to be held and used by an entity
          be  reviewed  for  impairment   whenever  events  or  changes  in
          circumstances indicate that the  carrying amount of an  asset may
          not be  recoverable.  In  addition, the  Statement requires  that
          long-lived assets  and  certain identifiable  intangibles  to  be
          disposed of be reported  at the lower of carrying amount  or fair
          value less cash to sell.

          FAS No. 121 is  effective for fiscal years beginning  after 1995.
          The Company plans to adopt FAS No. 121 effective January 1, 1996.
          Management does  not anticipate  that adoption of  this Statement
          will  have   a  material   impact  on  the   Company's  financial
          statements.

          During 1995, the FASB  issued FAS No. 123 "Accounting  for Stock-
          Based Compensation," which encourages companies to adopt the fair
          value based method  of accounting  for stock-based  compensation. 
          This  method  requires the  recognition  of compensation  expense
          equal to the fair value of  such equity securities at the date of
          the grant.  This  statement also allows companies to  continue to
          account  for stock-based compensation  under the  intrinsic value
          based  method,  as  prescribed  by  Accounting  Principles  Board
          Opinion No. 25 "Accounting for  Stock Issued to Employees,"  with
          footnote  disclosure of the pro  forma effects of  the fair value
          based  method.  FAS No. 123 is effective for transactions entered
          into in years that begin after December 15, 1995.

          The Company plans to  adopt FAS No. 123 during 1996 by continuing
          to account for stock-based compensation under the intrinsic value
          method and disclosing  the pro  forma effects of  the fair  value
          method in the footnotes to the financial statements.

          2. Investments

          Fixed Maturities

          The amortized cost, gross unrealized gains and losses  and market
          values  of   fixed  maturities  available  for   sale  and  fixed
          maturities held  to  maturity  at December  31,  1995  and  1994,
          respectively were as follows (in thousands):
                                                          
                                                 Gross    Gross
                                        Amort-   Unreal-  Unreal-
                                        ized     ized     ized     Market
                                        Cost     Gains    Losses   Value   
          Fixed Maturities Available
           For Sale as of December 31,
           1995:
          U.S. Treasury securities and 
           obligations of U.S.         
           government agencies and     
           corporations                 $ 15,826 $  1,494 $      5 $ 17,315
          Obligation of states and
           political subdivisions          4,686      266      -0-    4,952
          Foreign government debt                 
           securities                         15      -0-        1       14
          Corporate securities            98,822    5,092    1,048  102,866
          Mortgage-backed securities     344,352   14,600      493  358,459
            Total Fixed Maturities                                  
             Available For Sale          463,701   21,452    1,547  483,606
          Fixed maturities held to
           Maturity:
           Private Placements-Corporate   14,420      370      513   14,277
           Total Fixed Maturities       $478,121 $ 21,822 $  2,060 $497,883
                                                         
          Fixed Maturities Available                     
           For Sale as of December 31,            
           1994: 
          U.S. Treasury securities and                    
           obligations of U.S.
           government agencies and      
           corporations                 $ 14,388 $    127 $    508 $ 14,007
          Obligations of states and      
           political subdivisions          2,182       48      180    2,050
          Foreign government debt
           securities                         16      -0-        2       14
          Corporate securities            76,815      260    8,742   68,333
          Mortgage-backed securities     294,862    1,798   23,980  272,680
          Total Fixed Maturities
           Available For Sale            388,263    2,233   33,412  357,084
          Fixed Maturities held to 
           Maturity:
          Private Plavements-Corporate    23,776      888      489   24,175
          Total Fixed Maturities        $412,039 $  3,121 $ 33,901 $381,259
            

          The amortized cost and  market value of fixed  maturities carried
          at  amortized cost  at  December  31,  1995  is  shown  below  by
          contractual  maturity.     Actual  maturities  may   differ  from
          contractual maturities  because borrowers  may have the  right to
          call or  prepay obligations  with or  without call  or prepayment
          penalties.


                                       Fixed Maturities Available for Sale 
                                       Amortized                 Market  
                                        Cost    (in thousands)   Value    

          Due in one year or less......$  4,370                $  4,370
          Due after one through 
            five years.................  15,407                  16,043
          Due after five through ten 
            years......................  22,005                  23,973
          Due after ten years..........  77,567                  80,761
          Mortgage backed securities... 344,352                 358,459
                  
               Total Fixed Maturities
               Available for Sale     $ 463,701               $ 483,606    
                                                     
                                       Fixed Maturities Held to Maturity   
                                       Amortized                 Market
                                        Cost    (in thousands)   Value    

          Due in one year or less.....$     372               $     361
          Due after one through 
            five years................    6,107                   6,167
          Due after five through ten 
            years.....................    7,164                   7,007 
          Due after ten years.........      777                     742
          Mortgage backed securities..        0                       0
              
               Total Fixed Maturities
               Held to Maturity       $  14,420               $  14,277

          Proceeds  from  sales  and  maturities of  investments  in  fixed
          maturities  during  1995,   1994  and  1993   were  approximately
          $47,316,000,  $59,247,000  and $  243,999,000.    Gross gains  of
          approximately $578,000,  $824,000 and $5,888,000 and gross losses
          of approximately  $22,000, $193,000 and $65,000  were realized on
          those sales and maturities in 1995, 1994 and 1993, respectively.

          Equity Securities

          The change  in net unrealized appreciation  for equity securities
          was $ 277,000  and ($579,000)  for the years  ended December  31,
          1995  and 1994, respectively.  Amounts  as of December 31 were as
          follows:
                                                         1995        1994  
                                                         (in thousands)    

          Unrealized appreciation                 $     1,172  $      887  
           
          Unrealized depreciation                         (21)        (13) 
            
          Net unrealized appreciation             $     1,151  $      874  


          Net Investment Income

          The  components  of  net  investment  income  are  summarized  as
          follows:
                                                  Year  Ended December  31,
                                                       (in thousands)
                                                   1995     1994     1993  

          Fixed maturities                       $49,329  $40,938  $46,287
          Equity securities                           65       12        6
          Other, including policy loans,
           real estate and mortgage loans         19,392   19,650   15,839
                                                  68,786   60,600   62,132
          Investment expenses                     (4,005)  (3,047)  (4,584)

          Net investment income                  $64,781  $57,553  $57,548


          Realized Gains and Losses 

          Net realized gains (losses) included in net investment income are
          summarized below:
                                                  Year  Ended December  31,
                                                       (in thousands)
                                                   1995     1994     1993  

          Fixed maturities available for sale    $   556  $    78  $ 5,822

          Equity securities                          (26)     324        3

          Other investments                          (97)     293    2,664 
                                                     433      695    8,489
          Income taxes                               152      243    2,971

          Net realized gains                     $   281  $   452  $ 5,518


          Non-income producing investments

          The carrying  value of  non-income producing investments  were as
          follows as of December 31:
                                                       1995         1994   
                                                        (in thousands)     
          Fixed maturities                         $       48    $     106 
          Mortgage loans                                  400          305 
          Total                                    $      448    $     411 


          Mortgage loans and invested real estate

          The  Company's  mortgage  loans  and  invested  real  estate  are
          diversified  by property  type,  location and  issuer.   Mortgage
          loans are collaterized  by the related properties  and such loans
          generally range from 15%  to 80% of the  property's value at  the
          time the  loan is made.   No new mortgage loans  were made during
          the three year period ended December 31, 1995.


          Financial Industries Corporation

          Equity securities includes a $1,404,150 investment,  ($318,390 at
          cost),  in 37,950 shares of  common stock of Financial Industries
          Corporation  (FIC) (See Note 8).   This represents  3.5% of FIC's
          outstanding common stock at December 31, 1995.

          3. Disclosures about Fair Value of Financial Instruments

          The estimated fair values  of the Company's financial instruments
          at December 31, 1995 are as follows:
                                                        Carrying   Fair
                                                         Amount   Value  
                                                          (in thousands)
          Financial assets:                                        
          Fixed maturities                              $478,121  $497,883
          Policy loans                                    53,656    53,656
          Mortgage loans                                  14,836    16,187
          Short-term investments                          85,994    85,994
          Cash and cash equivalents                        6,537     6,537
          Notes receivable from affiliates                61,224    61,224

                                                         Carrying     Fair
                                                          Amount      Value
                                                          (in thousands)
          Financial liabilities:                        
          Deferred annuities                            $124,208  $123,567
          Supplemental contracts                          12,066    11,597
          Senior loans                                    59,385    59,385
             
                                           
          The following methods  and assumptions were used  to estimate the
          fair value of each class of financial instrument:

          Fixed maturities

          Fair values are based on quoted market prices or dealer quotes.

          Policy loans

          Policy  loans  are, generally,  issued  with  coupon rates  below
          market  rates  and  are  considered  early payment  of  the  life
          benefit.    As  such,  the  carrying  amount  of these  financial
          instruments is a reasonable estimate of their fair value.

          Mortgage loans

          The  fair value of mortgage loans is estimated using a discounted
          cash  flow analysis using rates for BBB- rated bonds with similar
          coupon rates and maturities.

          Cash and cash equivalents and short-term investments

          The  carrying amount  of  these  instruments approximates  market
          value.

          Notes receivable from affiliates

          The  fair  value is  estimated based  on  a discounted  cash flow
          analysis using current rates  offered to the Company for  debt of
          the same remaining maturities.

          Senior loans

          The fair value has been set at the price to call the debt. 


          Deferred annuities and supplemental contracts

          The  fair value  of deferred  annuities  is estimated  using cash
          surrender  values.   Fair  values for  supplemental contracts  is
          estimated  using  a  discounted  cash  flow  analysis,  based  on
          interest rates currently offered on similar products. 


          4. Present value of future profits of acquired business

          An  analysis of the present  value of future  profits of acquired
          businesses is as follows:          


                                                    1995            1994  
          Beginning balance                      $  46,153      $   51,546
          Acquisition of insurance subsidiary        8,664             -0-
          Accretion of interest                      4,437           4,588
          Amortization                             (10,648)         (9,981)
          Ending balance                         $  48,606      $   46,153

          Amortization of the present value  of future profits included  in
          the  consolidated statements of income is net of the accretion of
          interest.

          The estimated amount  of present  value of future  profits to  be
          amortized  net of interest accretion during each of the next five
          years is as follows:
                                        
                                        1996             $ 5,642
                                        1997             $ 5,337
                                        1998             $ 4,994
                                        1999             $ 3,162
                                        2000             $ 2,485

          5. Acquisition of Business

          On February 14,  1995, the Company and Investors-NA completed the
          purchase  of  Meridian  Life  Insurance Company  (MLIC),  a  life
          insurer  domiciled in  Indiana,  from  Meridian Mutual  Insurance
          Company.   Under the terms of the agreement, the Company acquired
          approximately 82% of the outstanding common stock of MLIC for $14
          million.  Investors-NA acquired the remaining 18% for $3 million.
          Immediately  after finalizing  the transaction,  ILCO contributed
          its  acquired  shares  to  unassigned  surplus  of  Investors-NA,
          resulting in MLIC  being a wholly owned subsidiary  of Investors-
          NA.  ILCO's senior loan was increased  by $15 million (through an
          amendment  to  the loan  agreement) to  fund  its portion  of the
          purchase price.    Subsequent to  the purchase,  MLIC's name  was
          officially  changed  to  Investors'  Life  Insurance  Company  of
          Indiana  (INVIND).   The  transaction  was  accounted  for  as  a
          purchase  business combination.    Accordingly,  the  results  of
          INVIND's operations are included  in income from the date  of the
          acquisition  to December 31, 1995.   The purchase  price has been
          allocated  to  the fair  values  of  the  assets and  liabilities
          acquired, including the present value of future profits disclosed
          in Note 4. 


          The pro forma unaudited results of operations for the years ended
          December  31, 1995 and 1994, assuming the acquisition of MLIC had
          been consummated as of the beginning of 1994, are as follows:

                                                      Unaudited
                                                1995              1994  
                                                (in thousands, except
                                                    per share data)

          Total revenues                      $123,905          $134,431
          Net income                          $ 10,391          $  9,889
          Net income per share                                          
           available to common shareholders   $   2.05          $   1.92

           
          6. Senior Loans

          On  January 29, 1993, the Company prepaid all of the Subordinated
          Notes Payable and  purchased and canceled  all of the  detachable
          warrants (See Note 9).  The Company paid approximately $7 million
          of  prepayment penalty, the after-tax effect of which was charged
          against  earnings  in the  first quarter  of  1993.   The primary
          source of funds for this debt prepayment and warrant cancellation
          was an increase  in the  outstanding balance of  the Senior  Loan
          from  $60  million to  $110 million  pursuant  to an  amended and
          restated credit  agreement that was  entered into on  January 29,
          1993 (the  "New Senior Loan").  The terms of the New Senior Loan,
          which then matured on July 1, 1998, are substantially the same as
          the Senior Loan.

          Following is a summary  of outstanding debt at December  31, 1995
          and 1994:
                                                     1995              1994
                                                         (in thousands)    
          A series of separate notes,
          each of which is payable to a member bank
          of a lending syndicate with principal
          payments beginning April 1, 1993 and a
          final payment on or before July 1,
          1999.  Interest payable at the Company's 
          option based on (1) the managing bank's 
          corporate base rate plus 1.25%
          declining to .5% as principal declines,
          or (2) LIBOR plus 2.5% declining to
          1.75%.  The rate in effect at December 31,
          1995 and 1994 was 8.18% and 8.00%.         $   59,385  $   66,585

          The obligations of the Company under  the New  Senior  Loan  are
          secured  by:   (1)  all  of the  outstanding shares  of  stock of 
          Investors-NA, (2) a $15,000,000 surplus debenture of Investors-NA
          payable  to  the  Company,  which had  an  outstanding  principal
          balance  of  $6,956,224  as  of  December  31,  1995  and  (3)  a
          $140,000,000 surplus  debenture  of Investors-NA  payable to  the
          Company,   which  had   an  outstanding   principal  balance   of
          $62,340,000  as of  December 31,  1995.   The obligations  of the
          Company under the New Senior Loan are guaranteed by FIC.

          The  New Senior Loan documents  also require the  Company to make
          additional   mandatory  principal   payments  which   reduce  the
          quarterly principal  payments in the  inverse order of  their due
          dates.   The payments are equal  to (a) 100% of  the net proceeds
          from  the  issuance  of  the  Company's  capital  stock  or  debt
          securities  and (b)  the applicable  percentage of  the Company's
          annual  Excess  Cash Flow  (as  defined).   Additional  mandatory
          principal payments  during 1995,  1994 and 1993  were $4,200,000,
          $3,915,000  and  $-0-,  respectively.   The  Senior  Loan  may be
          prepaid, in whole or in part, without penalty or premium.

          In  connection with  the acquisition  of Meridian  Life Insurance
          Company in February, 1995  (See Note 5), the Company  borrowed an
          additional  $15 million under the New Senior Loan to help finance
          the purchase.   In addition,  the maturity schedule  was extended
          one year to July 1, 1999.  Maturities of the New Senior Loan over
          the next four years, are as follows:

                                     (in thousands)
                                 1996          $  18,941 
                                 1997             18,000
                                 1998             18,000
                                 1999              4,444
                                               $  59,385                   

          7. Federal Income Taxes

          The Company  files consolidated  federal income tax  returns with
          its  non-life  subsidiaries.     The  Company's  life   insurance
          subsidiaries file  consolidated federal  income tax returns.   In
          accordance  with the Company's  tax allocation agreement, federal
          income tax expense or benefit is allocated  to each member of the
          consolidated  group as  if  each member  were  filing a  separate
          return.

          The Omnibus  Budget Reconciliation Act of 1993 passed by Congress
          in  August  1993 ("the  enactment  date")  increased the  federal
          corporate income tax rate to 35%, retroactive to January 1, 1993.
          In accordance with  SFAS No. 109,  the effect of the  rate change
          was  reflected in  the third  quarter 1993  financial statements.
          The  rate change increased the  provision for income  taxes by an
          adjustment  to the  January  1, 1993  deferred  tax liability  of
          approximately $287,000.   

          The  U.S.  federal  income  tax provision  (benefit)  charged  to
          continuing operations  for the years  ended December  31, was  as
          follows:
           
                                                   1995     1994     1993 
                                                    (amounts in thousands)
          Current tax provision                    $   945  $ (465) $2,818
          Deferred tax provision                     4,824   6,248   2,300
            Total provision for income taxes        $5,769 $ 5,783  $5,118

          Provision  has not  been made  for state  and foreign  income tax
          expense since expense is minimal. 

          The provision for income taxes is less than the amount  of income
          tax determined by applying the U.S. statutory  federal income tax
          rate  (35% in  1995,  1994  and  1993)  to  pre-tax  income  from
          continuing operations  before extraordinary  item as a  result of
          the following differences: 

                                                   1995     1994     1993  
          Income taxes at the statutory rate     $ 5,769  $ 5,495  $ 6,061
          Increase (decrease) in taxes resulting
           from:
           Deferred compensation arrangement         -0-      375     (961)
           Effect of tax rate change                 -0-      -0-      287
           Other items, net                          -0-     (87)     (269)
           Total provision for income taxes      $ 5,769  $ 5,783  $ 5,118 


          Deferred taxes are recorded for temporary differences between the
          financial reporting bases and the federal income tax bases of the
          Company's  assets   and  liabilities.    The   sources  of  these
          differences and the estimated tax effect of each are as follows: 

                                           Dec. 31,   Dec. 31,
                                           1995       1994   
          Deferred Tax Liability:

          Deferred policy acquisition
           costs                           $  4,058   $ 4,215
          Present value of future profits    10,201     8,639
          Invested assets                       998       721
          Net unrealized appreciation on                        
           marketable equity securities       7,369       -0-
          Acquisition discounts on 
           mortgages/policy loans             2,404     2,846
          Other taxable temporary 
           differences                        3,135     2,326
          Total deferred tax liability     $ 28,165   $18,747


                                           Dec. 31,   Dec. 31,
                                           1995       1994    
          Deferred Tax Asset:                         

          Policy Reserves                  $   804    $ 3,832
          Net unrealized depreciation of
           marketable equity securities        -0-     10,607
          Deferred gains on real estate        527        580
          Depreciable Property                 -0-        -0-
          Other deferred tax assets          1,109        311
          Deferred Compensation                263        755
          Less:  Valuation allowance           -0-        -0-
          Total deferred tax asset         $ 2,703    $16,085

               Net deferred tax liability  $25,462    $ 2,662


          Deferred federal income tax  expense (benefit) of $17,976,000 and
          ($14,372,000) for 1995 and 1994, respectively, have been provided
          on  the  unrealized  appreciation  (depreciation)  of  marketable
          securities and  included in  the deferred  tax  liability.   This
          increase  in  deferred  tax  liability has  been  recorded  as  a
          reduction  to  the equity  adjustment due  to  the net  change in
          unrealized  appreciation   or  depreciation  and  has   not  been
          reflected in the deferred income tax expense.

          Under the  provisions of  pre-1984 life insurance  company income
          tax  regulations, a portion of "gain from operations" of ILIC and 
          Investors-NA  was  not  subject   to  current  taxation  but  was
          accumulated, for tax purposes, in special tax memorandum accounts
          designated  as  "policyholders'  surplus  accounts".  Subject  to
          certain limitations,"policyholders' surplus"  is not taxed  until
          distributed or  the insurance company  no longer qualifies  to be
          taxed as a  life insurance  company.  The  accumulation in  these
          accounts  for  Investors-NA and  ILIC  at December  31,  1995 was
          $8,225,000 and  $4,357,000, respectively.  Federal  income tax of
          $2,879,000 and $1,525,000 would  be due if the entire  balance is
          distributed at a tax rate of 35%.   

          The Company does not anticipate any transactions that would cause
          any part of the policyholders' surplus accounts to become taxable
          and, accordingly, deferred  taxes have not been  provided on such
          amounts.    At  December  31, 1995,  Investors-NA  and  ILIC have
          approximately  $90,000,000 and  $6,000,000, respectively,  in the
          aggregate  in  their  shareholders' surplus  accounts  from which
          distributions  could be  made without  incurring any  federal tax
          liability.

          At December 31,  1995, the Company and its  non-life wholly-owned
          subsidiaries   have   net   operating   loss   carryforwards   of
          approximately $2.4 million.

          At  December 31, 1995, there were no IRS examinations in progress
          for the Company or its subsidiaries.   

          8. Reinsurance

          The  Company  reinsures  portions  of  certain  policies  thereby
          providing greater diversification of risk and minimizing exposure
          on  larger  policies.    The   Company's  retention  on  any  one
          individual  ranges  from $60,000  to  $250,000  depending on  the
          company  and the risk. The  Company remains liable  to the extent
          the reinsurance  companies are  unable to meet  their obligations
          under the reinsurance agreements. 

          The amounts reported in the consolidated financial statements for
          reinsurance ceded are as follows:
                                                      December 31,         
                                                     1995          1994    
                                                       (in thousands)      
          Future policy benefits               $    7,964      $  8,479
          Unearned premiums                         2,634         2,265
          Other policy claims and benefits
           payable                                    155           271
          Amounts recoverable on paid claims        3,721         3,051
           Reinsurance receivables             $   14,474      $ 14,066

                                                  Years ended December 31,
                                                    1995       1994    1993
                                                      (in thousands)       
          Premiums                         $   8,898  $  10,907   $  11,878
          Policyholder benefits and
           expenses                        $  14,404  $  14,176   $  14,472

          9. Shareholders' Equity

          The  Company  is controlled  by  FIC,  a life  insurance  holding
          company,  through FIC's  ownership  of approximately  47% of  the
          Company's outstanding common  stock.  FIC  also holds options  to
          purchase up  to an additional  1,702,155 shares of  the Company's
          authorized  but unissued  common stock  at a  price equal  to the
          average market value during the six months preceding the exercise
          date.  If  all of these  options were  exercised at December  31,
          1995,  FIC  would own  approximately  62.42%  of  the issued  and
          outstanding  shares of  the Company's  common stock,  assuming no
          other options or warrants held by other parties were exercised. 

          In the event that any other  party seeks to acquire the Company's
          outstanding shares, FIC has  the right to acquire, without  prior
          approval and under the same pricing formula, the number of shares
          of common  stock which when  added to the  number of shares  then
          owned  by FIC,  amount to  51% of  the outstanding shares  of the
          Company.   These options  will remain  in effect  as long  as any
          indebtedness guaranteed by FIC remains outstanding (See Note 6).

          The  Company's ability to  pay dividends  to its  shareholders is
          affected, in part, by the receipt of dividends from Investors-NA,
          which is organized  under the  laws of the  state of  Washington.
          Under current Washington law, any  proposed payment of a dividend
          or  distribution which, together  with dividends or distributions
          paid  during the preceding twelve months,  exceeds the greater of
          (i) 10% of statutory  surplus as of the preceding  December 31 or
          (ii)  statutory  net  gain  from  operations  for  the  preceding
          calendar year is  called an "extraordinary dividend"  and may not
          be paid until  either it has been  approved, or a waiting  period 
          shall  have passed during which  it has not  been disapproved, by
          the insurance commissioner.

          In addition, Washington Laws require that prior notification of a
          proposed   dividend  be   given  to   the  Washington   Insurance
          Commissioner and  that  dividends may  be paid  only from  earned
          surplus.  Investors-NA does not presently have earned surplus  as
          defined by  the regulations  adopted by the  Washington Insurance
          Commissioner and,  therefore, is  not presently permitted  to pay
          cash dividends.

          The New Senior  Loan described  in Note 6  restricts the  Company
          from paying any dividends on its common stock during its term.

          Net  income  (before  surplus  debenture  interest  expense)  and
          capital  and surplus  of  Investors-NA as  reported to  insurance
          regulators  and   as  determined  in  accordance  with  statutory
          accounting practices are as follows:

                                              Year Ended December 31       
                                                  (in thousands)           
                                          1995          1994          1993 

          Net Income                  $  23,810     $  21,706     $  21,767
          Capital and Surplus         $  61,896     $  53,841     $  60,957

          In December 1994, the AICPA approved  Statement of Position 94-5,
          "Disclosures of  Certain Matters  in the Financial  Statements of
          Insurance  Enterprises."    This  statement   requires  insurance
          enterprises  to make  disclosures in  their  financial statements
          regarding   the  accounting  methods   used  in  their  statutory
          financial  statements  that  are  permitted  by  state  insurance
          departments   rather   than   prescribed   statutory   accounting
          practices.   Prescribed statutory accounting practices  include a
          variety  of publications  of  the NAIC  as  well as  state  laws,
          regulations   and  general   administrative  rules.     Permitted
          statutory accounting practices encompass all accounting practices
          not so prescribed. 

          The insurance  regulations of the  state of Washington  limit the
          amount  an insurer  may  invest in  the  obligations of  any  one
          corporation to  four percent of the  insurer's statutory admitted
          assets.    Investors-NA held  $52,500,000  in  subordinated notes
          issued by  Family Life Corporation, a  wholly-owned subsidiary of
          FIC, at December 31, 1995 and 1994.   This investment exceeds the
          limit on  investments prescribed by  the state  of Washington  by
          $9,282,287  and  $10,784,423  at  December  31,  1995  and  1994,
          respectively.     Prior  to  the  acquisition   of  these  notes,
          Investors-NA  received written approval from the Washington State
          Insurance Department  for  the inclusion  of the  full amount  of 
          these  notes in its statutory  admitted assets.   At December 31,
          1995  and  1994,  this  permitted  practice  increased  statutory
          surplus by  $9,282,287 and  $10,784,423 over what  it would  have
          been under prescribed statutory accounting practices.   

          In 1988, the Company authorized the issuance of 10 million shares
          of Class C Preferred Stock, $1.00 par value.  The  Company is not
          permitted, under the provisions of the Senior Loan Agreement (See
          Note 6),  to issue any preferred stock except Class A and Class B
          issued in connection with  the acquisition of the  Investors Life
          Companies.  The Company  has reacquired the Class  A and Class  B
          Preferred Stock and holds the shares in treasury.

          10. Detachable Warrants 

          The Company issued  on December  28, 1988, a  total of  1,107,480
          detachable  warrants entitling  the warrant  holders  to purchase
          19.95% of the Company's  common stock, on a fully  diluted basis,
          at an  exercise price of $3.33  per share.  On  January 29, 1993,
          the Company purchased and canceled all of the detachable warrants
          for approximately $8 million (See Note 6).

          11. Retirement Plans and Employee Stock Plans

          Retirement Plan

          The Company  maintains a retirement plan,  ("ILCO Pension Plan"),
          covering substantially all employees  of the Company.    The plan
          is a non-contributory, defined benefit pension plan, which covers
          each  eligible employee who has attained  21 years of age and has
          completed one  year  or  more of  service.    Each  participating
          company   contributes  an   amount   necessary  (as   actuarially
          determined) to  fund the benefits provided  for its participating
          employees.

          The normal retirement benefit provided under the plan is equal to
          1-2/3%  of  final  average eligible  earnings  less  3/4% of  the
          participant's Social Security  Covered Compensation multiplied by
          the number of years of credited service (up to 30 years).

          The compensation used  in determining benefits under  the plan is
          the  highest average  earnings received  in any  five consecutive
          full-calendar years  during  the  last  ten  full-calendar  years
          before the  participant's retirement date.  The plan provides for
          reduced  early retirement  benefits at  age 60,  with at  least 5
          completed years of service.

          In connection  with the  acquisition of the  Investors Companies,
          the Company  adopted a  non-contributory defined  benefit pension
          plan,   ("The   IIP  Pension   Plan")   that  provided   benefits
          substantially similar  to the  benefits provided under  the CIGNA 
          Corporation  pension plan,  for  all employees  of the  Investors
          Companies  who had  been  eligible to  participate  in the  CIGNA
          Pension Plan.   As of  January 1, 1990, the IIP Pension Plan  was
          merged  into the ILCO Pension  Plan.  Accrued  benefits under the
          IIP  Pension   Plan  were  frozen   as  of  December   31,  1989.
          Accordingly,  accrued  benefits  under  the  ILCO  Pension   Plan
          applicable to former participants in the IIP Pension Plan consist
          of  two   components:  (a)  an  accrued   benefit  determined  in
          accordance with the provisions of the IIP Pension Plan, frozen as
          of December 31, 1989 and (b) an accrued benefit determined on the
          benefit formula described above, based on credited service earned
          after January 1, 1990.

          The pension costs for all plans include the following components:

                                                  1995               1994
                                                     (in thousands)        
          Service cost-benefits earned
           during the period                      $  313           $   316

          Interest cost on projected
           benefit obligation                        571               509
                                                
          Return on plan assets                   (1,081)           (1,027)
                                             
          Amortization                              (269)             (268)
                                                
          Pension benefit                         $ (466)          $  (470) 



          The  following  summarizes  the funded  status  of  the plans  at
          December 31:
                                                  1995                1994 
                                                      (in thousands)       

          Actuarial present value of:
            Vested benefit obligation           $ (7,495)         $ (5,858)

            Accumulated benefit obligation      $ (7,870)         $ (6,026)
                                              
          Projected benefit obligation          $ (9,155)         $ (6,701)
                                                                          
          Plan assets at market value             14,316            13,665 
                                                        
          Plan assets in excess of projected
            benefit obligations                 $  5,161           $  6,964

          Unrecognized prior service cost       $ (1,888)         $ (2,156)

          Unrecognized net loss (gain)          $    700          $ (1,301)

          Prepaid pension expense               $  3,973          $  3,507

          The significant assumptions for the plans are as follows:

          The discount rate for projected benefit obligations was 7.00% and
          8.00% in 1995 and 1994, respectively. The assumed  long-term rate
          of compensation  increases  was  6.5%  for  1995  and  1994.  The
          long-term  rate of return  on plan assets  was 8.0% for  1995 and
          1994.

          Savings and Investment Plan

          The Company adopted  a Savings and Investment  (401(k)) Plan that
          allows  eligible  employees  who  have  met  a  one-year  service
          requirement  to make contributions to the  Plan on a tax-deferred
          basis.  A Plan participant  may elect to contribute up to  16% of
          eligible earnings  on a  tax deferred  basis, subject to  certain
          limitations  applicable  to  "highly  compensated  employees"  as
          defined in  the  Internal Revenue  Code.   Plan participants  may
          allocate   contributions,   and  earnings   thereon,   between  a
          Guaranteed  Fund and a Variable Fund.  Effective January 1, 1994,
          the  Plan  was  amended  to include  four  additional  investment
          options  which  may be  selected  by participants.    The Account
          Balance of  each Participant is 100% vested  at all times.  Prior
          to January 1, 1990, the Company made matching contributions of up
          to  50% of the first  6% of eligible  compensation contributed by
          the plan participants.  Vesting  of such company contributions is
          based  on number of years of service.  The employer contributions 
          were discontinued effective January 1, 1990.

          During 1995,  the Plan was ammended to  allow for the addition of
          Family  Life Insurance Company  (FLIC), a wholly-owned subsidiary
          of FIC, as a participating employer, thus allowing FLIC employees
          to participate  in the Plan.   The  amendment did not  affect the
          Plan's tax-qualified status.

          Employee Stock Ownership Plan

          During 1979, the Company  established an Employee Stock Ownership
          Plan and a related trust  for the benefit of its employees.   The
          Plan generally covers employees  who have attained the age  of 21
          and have  completed one year of service.   Vesting of benefits to
          employees  is  based  on   number  of  years  of  service.     No
          contributions were  made to the Plan  in 1995, 1994 or  1993.  At
          December 31, 1995,  the Plan had a total of  313,932 shares which
          are  allocated   to   participants  and   65,805   which   remain
          unallocated.

          During 1995,  the Plan was amended  to allow for  the addition of
          FLIC as a participating employer, thus allowing FLIC employees to
          participate in the Plan.  The amendment did not affect the Plan's
          tax-qualified status.

          Stock Option Plans

          Under  the  Company's Incentive  Stock  Option  Plan, options  to
          purchase  shares of the Company's  common stock, at  100% of fair
          market  value on  the  date of  grant, have  been granted  to key
          employees.  A  total of  315,000 shares of  the Company's  common
          stock are currently reserved for  issuance under this  plan.   As
          of  December 31, 1995,  options to  purchase 327,850  shares have
          been  granted since the plans inception. As of December 31, 1995,
          208,250 options  have been exercised and 86,100 options have been
          terminated. 

          At December 31,  1995  33,500 options  to purchase shares  of the
          Company's  common stock  at prices  ranging  from $3.33  to $9.25
          remain outstanding. The number of options exercised in 1995, 1994
          and 1993 were 59,000, 5,500 and 2,000, respectively.  

          Under the  Non-Qualified Stock Option Plan  for certain officers,
          directors,  agents   and  others,  the  Board   of  Directors  is
          authorized to issue options  to purchase up to 600,000  shares of
          the  Company's common stock  at 100% of the  fair market value on
          the date of  grant but in no case less than  $3.33 per share.  In
          1988,  options to purchase 330,000 shares were granted at a price
          of $3.33 per share.  In  1991, options to purchase 50,000  shares
          were granted at prices ranging from  $8.75 to $9.25.  In 1992 and
          and   1990   options  to   purchase  60,000  and   30,000  shares
          respectively,  expired.   In 1995,  options  to  purchase  60,000
          shares were granted at  a price of $11.12 per share.

          In 1989  options  to purchase  600,000  shares of  the  Company's
          common stock at  $1.00 per  share were  granted by  the Board  of
          Directors  to the Company's Chairman of the Board.  These options
          became exercisable  upon approval  of the  Board of  Directors in
          annual installments of 150,000 shares each.  The last installment
          was  granted  in 1992.   In  1992,  the chairman  surrendered for
          cancellation 120,000 of these  options.  In October of  1993, the
          Company entered into  an agreement with the Chairman, whereby the
          Chairman agreed  to surrender all  of his remaining  common stock
          options between  1993  and 1996.    Pursuant to  this  agreement,
          358,500 options were surrendered  through December 31, 1995, with
          121,500 options remaining to be surrendered during 1996 (see Note
          13).

          12. Leases

          The Company  and its subsidiaries occupy  office facilities under
          lease  agreements which  expire  at various  dates through  2005.
          Certain office space leases may  be renewed at the option of  the
          Company.

          Rent expense in 1995, 1994,  and 1993 was $2,531,085, $1,424,946,
          and  $2,091,220,  respectively,  under  these  lease  agreements.
          Minimum annual future rentals are as follows:
                                                          (in thousands)
                                                       1996       1,274
                                                       1997       1,115
                                                       1998         637
                                                       1999         637
                                                       2000         637
                                                Thereafter        3,183
                                                               $  7,483

          13. Related Party Transactions 

          On  June 12,  1991,  FIC (which  owns  approximately 47%  of  the
          outstanding  common  stock  of   the  Registrant)  completed  the
          purchase of  all the outstanding shares of  Family Life Insurance
          Company,  a  Washington domiciled  life  insurance  company, from
          Merrill  Lynch  Insurance  Group,   Inc.    The  transaction  was
          financed, in part, by a senior subordinated loan of $22.5 million
          by  Investors - NA to Family Life Corporation (FLC), an indirect,
          wholly-owned subsidiary of FIC, and a senior loan of $2.5 million
          by  Investors - NA to FIC.   In addition to the interest provided
          under the  terms of said loans,  Investors - NA was  granted non-
          transferrable options to purchase up to a total of 9.9 percent of 
          the common shares of FIC.  The option price is  $10.50 per share,
          equivalent  to   the  then  current  market   price,  subject  to
          adjustment to prevent the effect of dilution. The options provide
          for  their expiration at the  time of final  repayment of each of
          the respective loans. 

          On July  30, 1993,  FLC  prepaid its  Merrill Lynch  subordinated
          loans.   The transaction was financed, in part, by a subordinated
          loan  of  $30  million  by  Investors  -  NA  to  FLC  and  by  a
          subordinated loan of  $4.5 million  by Investors -  NA to  Family
          Life  Insurance  Investment   Company,  (FLIIC),  a  wholly-owned
          subsidiary of FIC and parent of FLC.

          Notes   receivable  from   affiliates   of  $61,224,000   include
          $52,500,000 senior subordinated loans by Investors - NA to FLC, a
          subordinated  loan of $4,500,000 to  FLIIC, and a  senior loan of
          $4,224,000 to FIC.  Interest earned by ILCO on the aforementioned
          loans totaled  $6,044,322,  $5,993,512, and  $4,104,661 in  1995,
          1994 and 1993, respectively.   At December 31, 1995  and December
          31,  1994   accrued  interest  was   $1,459,408  and  $1,933,169,
          respectively.

          In May, 1989,  the Board of Directors of the  Company granted the
          Chairman of the Board the right to borrow up to $650,000 from the
          Company to be  used solely for  the purchase of FIC  common stock
          pursuant  to his  then existing  options.   This loan,  which was
          issued on June 1, 1989, carries  no interest and is repayable  in
          five  years unless  forgiven at  the discretion  of the  Board of
          Directors or  upon the  occurrence of certain  designated events.
          This loan was repaid in full in 1994.  

          Rent   and   certain   other   operating   expenses   aggregating
          approximately $830,000, $585,000, and  $860,000, were incurred by
          FIC  in 1995,  1994  and 1993,  respectively,  on behalf  of  the
          Company.  The Company reimbursed FIC for these costs.

          ILCO  received  $15 million,  $13 million,  and $13  million from
          Family  Life Insurance Company for direct  costs incurred by ILCO
          on  behalf of Family Life Insurance Company's operations in 1995,
          1994 and 1993, respectively.  Under an agreement between ILCO and
          Family Life all direct costs incurred on behalf of  the other are
          to be reimbursed.

          In  connection  with  the  purchase  of  the  Austin  Centre,  an
          office-hotel property in Austin, Texas, Investors-NA entered into
          an agreement with  FIC Realty  Services, Inc.("FIC  Realty") ,  a
          subsidiary of FIC, to furnish real estate brokerage services.  In
          connection with  the agreement, FIC  Realty received  commissions
          from Investors-NA of $159,500.   In addition, Investors-NA leased
          a portion of the Austin Centre  to FIC Realty pursuant to a lease
          agreement in which FIC Realty  pays monthly rent to  Investors-NA 
          in an amount  equal to 95%  of the net  operating profits of  the
          hotel.  Total rent payable to Investors-NA under the terms of the
          lease agreement is $1,991,356,  $1,346,160, and $745,665 in 1995,
          1994 and 1993, respectively.

          Alcoholic  beverages had been sold  at the hotel  by an unrelated
          third party pursuant  to a  lease it  had with  FIC Realty  until
          September 30,  1994.  Commencing  October 1, 1994,  all alcoholic
          beverages   sales   have  been   conducted  by   Atrium  Beverage
          Corporation ("Atrium Beverage"), a  new subsidiary of FIC Realty.
          Atrium  Beverage subleases from FIC Realty space in the hotel for
          the  storage, service and sale of alcoholic beverages pursuant to
          which Atrium Beverage pays monthly rent to FIC Realty of $12,500.
          The sublease  provides that  the rent  paid during  each calendar
          year  will  be reduced  to the  extent  necessary to  insure that
          Atrium Beverage's net  operating profit from alcoholic  beverages
          sales is not less than 5%  of its gross receipts from such sales.
          Atrium Beverage and FIC  Realty are also parties to  a management
          agreement whereby FIC Realty  manages Atrium Beverage's alcoholic
          beverage operations at  the hotel for a monthly  fee equal to 28%
          of the  gross receipts  from alcoholic beverages  sales.   During
          1995  and  1994,   Atrium  Beverage  paid  FIC  Realty  rent  and
          management  fees totalling  $319,815  and $81,233,  respectively.
          All  of that amount  was included  in the  hotel revenues  of FIC
          Realty  for purposes  of  determining its  net operating  profits
          under the hotel lease agreement with Investors-NA. 

          Investors-NA  entered into  a management  agreement in  September
          1991  with FIC  Property Management,  Inc. ("FIC  Management"), a
          subsidiary of FIC, whereby it appointed FIC Management to manage,
          lease  and operate  the office  tower, retail  areas, underground
          parking garage and common areas of Austin Centre.  FIC Management
          is paid fees in an amount equal to 5% of the net operating profit
          that Investors-NA receives from the properties managed and leased
          by  FIC  Management.   During  1995,  Investors-NA  paid  fees of
          $130,760 to  FIC Management under  this agreement as  compared to
          $106,460 and $77,115 in 1994 and 1993, respectively.

          In  October of 1993, the  Company entered into  an agreement with
          the Chairman, whereby the Chairman agreed to surrender all of his
          remaining common  stock options for  consideration of  $6,847,000
          (see  Note 11).    Prior to  entering  into this  agreement,  the
          Company had accrued compensation expense related to these options
          of  $4,225,000.   Upon  entering into  the agreement,  additional
          compensation was recorded totaling  $2,622,000 for the year ended
          December 31, 1993 to increase total compensation to the surrender
          price.   Accordingly,  a  liability was  recorded for  the unpaid
          portion of  the agreement.   Pursuant to  this agreement,  during
          1993 the Chairman was paid $3,237,120 for cancellation of 240,000
          of  these  options  and during  1994  he  was  paid $997,520  for
          cancellation of  68,500 options  and $379,143 for  federal income 
          tax  reimbursement relating  to  the cancellation  of options  in
          1993.   During  1995,  the Chairman  was  paid $836,582  for  the
          cancellation  in 1995  of options  to  purchase 50,000  shares of
          ILCO's  Common  Stock,  $156,323   for  the  federal  income  tax
          reimbursement relating to the cancellation  in 1994 of options to
          purchase 68,500 shares and $127,608 as the final payment relating
          to  the cancellation  in  1993  of  options to  purchase  240,000
          shares.   The federal income  tax reimbursements are  expensed in
          the period when they are incurred.

          Pursuant  to a  data  processing agreement  with a  major service
          company,  the data processing needs of ILCO's and FIC's insurance
          subsidiaries  were  provided  by  an offsite  third  party  until
          November 30, 1994.   Commencing  December 1, 1994,  all of  those
          data  processing needs are  provided to ILCO's  and FIC's Austin,
          Texas  and  Seattle,   Washington  facilities  by  FIC   Computer
          Services, Inc. ("FIC Computer"),  a new subsidiary of FIC.   Each
          of FIC's  and ILCO's  insurance subsidiaries  has entered  into a
          data processing agreement with  FIC Computer whereby FIC Computer
          provides  data processing  services to  each subsidiary  for fees
          equal to such subsidiary's  proportionate share of FIC Computer's
          actual   costs  of  providing  those   services  to  all  of  the
          subsidiaries.    Family  Life  paid  $151,977  and  $779,052  and
          Investors-NA, Investors-IN  and ILIC paid $181,971 and $1,655,486
          to  FIC Computer  for  data processing  services provided  during
          December 1994 and 1995, respectively.

          14. Commitments and Contingencies

          The  Company and its subsidiaries are defendants in certain legal
          actions related to the normal business operations of the Company.
          Management believes that the resolution  of such matters will not
          have a material impact on the financial statements.  

          15. Net Income Per Share

          Net  income  per share  was  determined  by  dividing net  income
          available to  common shareholders by the  weighted average number
          of  shares   of  common   stock  and  common   stock  equivalents
          outstanding during each year.

          For the years ended December 31, 1995, 1994 and  1993, net income
          available to common shareholders is calculated as follows:

                                                 1995       1994       1993

          Income before extraordinary                  (in thousands)
           item and cumulative effect of                  
           change in accounting principle        $10,714  $ 9,917  $12,200

          Interest expense reduction, 
           net of income tax effect                  671      472      660

          Income before extraordinary
           item and cumulative effect 
           of change in accounting 
           principle available to 
           common shareholders                    11,385   10,389   12,860

          Cost of early extinguishment
           of debt, net of tax                       -0-      -0-   (6,253)

          Income before cumulative 
           effect of change in accounting
           principle available to common
           shareholders                           11,385  $10,389    6,607

          Cumulative effect of change in 
           accounting principle                      -0-      -0-   (2,600)

          Net income available to 
           common shareholders                   $11,385  $10,389  $ 4,007


          Changes  in the market price  of the Company's  common stock also
          impacts the number of common stock options and warrants which are
          considered   dilutive   under  the   treasury  stock   method  of
          calculating the  weighted average  common stock and  common stock
          equivalents. For the years ended December 31, 1995, 1994 and 1993,
          weighted  average  common  stock and common stock  equivalents is
          calculated as follows: 
                                          1995        1994        1993  
                                                  (In thousands)
          Weighted average common
           shares outstanding             4,139       4,116       4,109
          Common stock equivalents:

           Common stock options           2,085       2,084       2,480
           Common stock warrants                                     91

          Less assumed repurchase of 
           shares using the treasury
           stock method                    (835)       (822)       (822)

          Common stock and common 
           stock equivalents              5,389       5,378       5,858


          16.  Quarterly Financial Data (unaudited)
               (in thousands, except per share amounts)

                                           Three Months       Three Months
                                           Ended              Ended
                                           March 31,          June 30,
                                        1995      1994     1995     1994   

          Net Operating Revenue         $29,105  $29,325  $31,017  $29,437

          Net Income                    $ 2,589  $ 2,892  $ 2,601  $ 2,031

          Net income per share
           available to common
           shareholders                 $  0.51  $  0.56  $  0.52  $  0.40
                                                                    
           
                                           Three Months      Three Months
                                           Ended             Ended
                                           September 30,     December 31,
                                        1995      1994      1995      1994 

          Net Operating Revenue         $30,453  $27,595  $31,815  $28,651

          Net Income                    $ 2,498  $ 2,099  $ 3,026  $ 2,895

           Net income per share
            available to common
            shareholders                $  0.50  $  0.42  $  0.58  $  0.57 



                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                    SCHEDULE I - SUMMARY OF INVESTMENTS OTHER THAN
                           INVESTMENTS IN RELATED PARTIES
                                  December 31, 1995
                              (in thousands of dollars)
                                                

          Column A                            Column B  Column C  Column D
                                                                  Amount at
                                                                  Which
                                                                  Shown in
                                                                  the
                                                                  Balance
          Type of Investment                  Costs     Value     Sheet    
          Fixed maturities available for
           sale:
          United States Government and
           government agencies and
           authorities                        $ 15,826  $ 17,315  $ 17,315
          States, municipalities and
           political subdivisions                4,686     4,952     4,952
          Foreign governments                       15        14        14
          Corporate securities                  98,822   102,866   102,866
          Mortgage-backed securities           344,352   358,459   358,459

          Total fixed maturities available
           for sale                            463,701   483,606   483,606
                                                                   
          Fixed maturities held to maturity     14,420    14,277    14,420

          Total fixed maturities               478,121   497,883   498,026

          Equity securities:
          Public utilities                           2         3         3
          Banks, trust and financial
           institutions                             31        87        87
          Industrial, miscellaneous and all
           other                                    57        65        65

          Total equity securities                   90       155       155

          Policy loans                          53,656    53,656    53,656
          Mortgage loans                        14,836    16,187    14,836
          Real estate                           15,467    15,467    15,467
          Short term investments                85,994    85,994    85,994

          Total investments                   $648,164  $669,342  $668,134 



                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
              SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
          UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
                           December 31, 1995, 1994 and 1993
                      

          Column A                                    Column B   Column C
                                                      Balance at
                                                      Beginning
          Name of Debtor                              of Period  Additions

          December 31, 1995                           $    -0-      -0-


          December 31, 1994

          Roy F. Mitte
            Non-interest bearing loan
             repayable in two years unless
             forgiven by Board of Directors           $650,000      -0-

          December 31, 1993

          Roy F. Mitte
            Non-interest bearing loan
             repayable in three years unless
             forgiven by Board of Directors           $650,000      -0-



                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
              SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
          UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
                     December 31, 1995, 1994 and 1993, Continued
                      
                                                        
          Column A                            Column D            Column E
                                                        Amounts   Balance
                                              Amounts   Written   at End of
          Name of Debtor                      Collected Off       Period   

          December 31, 1995                   $    -0-      -0-   $    -0-

          December 31, 1994

          Roy F. Mitte
            Non-interest bearing loan
             repayable in two years unless
             forgiven by Board of Directors   $650,000      -0-   $    -0- 

          December 31, 1993                             

          Roy F. Mitte
            Non-interest bearing loan
             repayable in three years unless
             forgiven by Board of Directors        -0-      -0-   $650,000 




                  INTERCONTINENTAL LIFE CORPORATION (PARENT COMPANY)
             SCHEDULE III - CONDENSED FINANCIAL STATEMENTS OF REGISTRANT
                                    BALANCE SHEETS
                              December 31, 1995 and 1994
                              (in thousands of dollars)


          ASSETS                                        1995         1994 

          Short-term investments                $      7,022  $     8,305

          Cash and cash equivalents                       63          195

          Subordinated debenture receivables
           from Investors Life Insurance 
           Company of North America, 
           due September 30, 1999                     72,835       87,795

          Investments in and advances to 
            subsidiaries                              76,730       21,778

          Accounts receivable                          6,117        6,149

          Property, plant and equipment, net             279          192

          Federal income tax receivable                  -0-          -0-

          Other assets                                 2,237        2,877

                                                $    165,283  $   127,291



                  INTERCONTINENTAL LIFE CORPORATION (PARENT COMPANY)
             SCHEDULE III - CONDENSED FINANCIAL STATEMENTS OF REGISTRANTS
                              BALANCE SHEETS, continued
                             December 31, 1995 and 1994 
                              (in thousands of dollars)

          LIABILITIES AND SHAREHOLDERS' EQUITY              1995      1994 
          Liabilities:
          Accounts payable and accrued expenses         $  5,293  $  4,570
          Senior loans                                    59,385    66,585
          Senior subordinated debenture payable to
           Intercontinental Life Insurance Company           -0-       200
          Deferred gain on sale of real estate             1,066     1,175
                                                          65,744    72,530
          Redeemable preferred stock:
           Class A preferred stock, $1 par value,
            shares authorized and issued                   5,000     5,000
           Class B preferred stock, $1 par value,
            shares authorized, and issued                 15,000    15,000
                                                          20,000    20,000
          Redeemable preferred stock, repurchased and 
           held as treasury stock                        (20,000)  (20,000)
                                                             -0-       -0-

          Shareholders' equity:
           Class C preferred stock, $1 par value,
            10,000,000 shares authorized, none issued
            Common stock, $.22 par value, 10,000,000
            shares authorized; 5,166,239 and 5,107,239
            shares issued, 4,175,329 and 4,116,329
            shares outstanding in 1995 and 1994
            respectively                                   1,137     1,124
           Additional paid-in capital                      3,521     2,854
           Net unrealized appreciation of securities
            held by insurance subsidiaries                   748       568
           Net unrealized gain (loss)                         
            on investments in fixed
            maturities available for sale held by          
            insurance subsidiaries                        12,938   (20,266)
           Retained earnings (including $78,639 and
            $68,654 of undistributed earnings of
            subsidiaries at December 31, 1995 and 1994,
            respectively)                                 81,759    71,045
           Common treasury stock, at cost, 665,950       100,103    55,325
            shares in 1995 and 1994                         (564)     (564)
           Total shareholders' equity                     99,539    54,761
           Total liabilities and shareholders' equity   $165,283  $127,291 



                  INTERCONTINENTAL LIFE CORPORATION (PARENT COMPANY)
          SCHEDULE III - CONDENSED FINANCIAL STATEMENTS OF REGISTRANT,     

                            STATEMENTS OF INCOME,continued
                     Years Ended December 31, 1995, 1994 and 1993
                              (in thousands of dollars)

                                            1995         1994        1993 
          Revenues charged to 
           subsidiaries:
           Interest income             $    8,236  $     7,888 $     8,850
           Other income                       134          113         112
                                            8,370        8,001       8,962

          Operating expenses                1,779        1,386       4,409
          Interest expense                  5,469        4,914       5,666
                                            7,248        6,300      10,075

          Income (loss) from
           operations                       1,122        1,701     (1,113)
          Federal income tax 
           provision                          393          970       3,215 

          Net income (loss) before   
           equity in undistributed 
           earnings from subsidiaries
           extraordinary item and 
           change in accounting 
           principle                          729          731     (4,328) 

          Equity in undistributed 
           earnings from subsidiaries       9,985        9,186     16,528 

          Net income before extra-
           ordinary item and cumula-
           tive effect of change in 
           accounting principle            10,714        9,917     12,200

          Extraordinary Item:

           Cost of early extinguish-
            ment of debt, net of tax          -0-          -0-     (6,253)

           Net income before cumula-
            tive effect of change in 
            accounting principle           10,714        9,917      5,947  
                                           
           Cumulative effect of change
            in accounting principle           -0-          -0-     (2,600)

            Net income                $    10,714  $     9,917  $   3,347 



                  INTERCONTINENTAL LIFE CORPORATION (PARENT COMPANY)
                  SCHEDULE III - CONDENSED STATEMENTS OF REGISTRANT
                          STATEMENT OF CASH FLOWS, continued
                              (in thousands of dollars)

                                                 Year ended December 31,
          CASH FLOWS FROM OPERATING               1995      1994      1993
           ACTIVITIES:
          Net income                          $ 10,714  $  9,917  $  3,347
          Adjustments to reconcile net income
           to net cash provided by (used in)
           operating activities:
          Amortization of deferred gain on
           sale of real estate                    (109)     (109)     (109)
          Unrealized appreciation
           (depreciation) of equity
           securities held by insurance
           subsidiaries                            180      (377)      211
          Decrease in accounts receivable           32       615        40
          Increase in investment
           in and advances to subsidiaries     (21,748)   (3,742)   (8,997)
          Increase (decrease) in accounts
           payable and accrued expenses            723       384    (1,496)
          Decrease in deferred federal income
           taxes, net                              -0-        83       417
          Decrease (increase) in other assets      640     1,028    (1,541)
          Other                                    (87)       79        38
           Net Cash (used in) provided by
            operating activities                (9,655)    7,878    (8,090)
          CASH FLOWS FROM INVESTING
           ACTIVITIES:
          Investments (purchased) sold           1,283      (302)    8,423
           Net cash provided by (used in)
            investing activities                 1,283      (302)    8,423
          CASH FLOWS FROM FINANCING
           ACTIVITIES:
          Repayment of debt                     (7,200)  (17,415)   (6,325)
          Payment on subordinated debenture
           payable                                (200)      (50)      (50)
          Stock options exercised                  680       -0-       -0-
          Payment received on subordinated
           debenture receivable                 14,960     8,744    15,000
          Accretion and dividends on
           preferred stock                         -0-       -0-    (8,012)
            Net cash provided by (used in) 
             financing activities                8,240    (8,721)      613

          Net increase in cash                    (132)   (1,145)      946
          Cash, beginning of year                  195     1,340       394
          Cash, end of year                   $     63  $    195  $  1,340



                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES 
                     SCHEDULE VI - REINSURANCE CEDED AND ASSUMED
                 For the years ended December 31, 1995, 1994 and 1993
                              (in thousands of dollars)


                                                    Ceded To    Assumed
                                        Direct      Other       From Other
          1995                          Amount      Companies   Companies 

          Life insurance in-force       $7,693,274  $  864,512  $    8,124

          Premium:
           Life insurance               $   17,877  $    8,773  $      811
           Accident-health insurance         2,260        (205)         38

          Total                         $   20,137  $    8,568  $      849

          1994

          Life insurance in-force       $7,056,436  $  427,611  $   24,073

          Premium:
           Life insurance               $   20,712  $    9,998  $      676
           Accident-health insurance         3,703         909         133

          Total                         $   24,415  $   10,907  $      809

          1993

          Life insurance in-force       $7,728,737  $  381,160  $   20,147

          Premium:
           Life insurance               $   23,061  $   10,545  $      684
           Accident-health insurance         4,129       1,333         118

          Total                         $   27,190  $   11,878  $      802 




                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                     SCHEDULE VI - REINSURANCE CEDED AND ASSUMED
                 For the years ended December 31, 1995, 1994 and 1993
                              (in thousands of dollars)


                                                    Percentage
                                        Net         Of Amount
          1995                          Amount      Assumed    

          Life insurance in-force        6,836,886         .12%

          Premium:
           Life insurance               $    9,915        8.18%
           Accident-health insurance         2,503        1.52%

          Total                         $   12,418        6.84%

          1994

          Life insurance in-force       $6,652,898        .36%

          Premium:
           Life insurance               $   11,390       5.94%
           Accident-health insurance         2,927       4.54%

          Total                         $   14,317       5.65%

          1993

          Life insurance in-force       $7,367,724        .27%

          Premium:
           Life insurance               $   13,200       5.18%
           Accident-health insurance         2,914       4.05%

          Total                         $   16,114       4.98% 




                                    Exhibit Index


               Exhibit    Page                Description
               Number    Number

                4(a)          Certificate  of  Incorporation of  Registrant
                                   filed  May  22,   1969  and   Amendments
                                   thereto (2)

                                   (i)  Amendment filed July 16, 1973

                                   (ii) Amendment filed August 4, 1977

                                   (iii)Amendment filed February 10, 1983

                                   (iv) Amendment filed December 14, 1988

                                   (v)  Amendment filed February 9, 1990

                4(b)          By-laws of Registrant. (3)

               10(a)          Registrant's Incentive Stock Option Plan. 
                              (1)

               10(m)          Lease dated December 20, 1985 between 
                              Registrant and Parker Road Associates for 
                              the rental of 40 Parker Road, Elizabeth, 
                              New Jersey. (4)

               10(o)          (i)  Grid Note dated December 18, 1985 in the
                                   amount   of   $800,000   made   by   the
                                   Registrant  and   payable  to  Midlantic
                                   National Bank. (4)

                               (ii) Demand Note dated December 18, 1985
                                   in the amount  of $491,165.03  made
                                   by   Registrant   and  payable   to
                                   Midlantic National Bank.(4)

               10(ah)              Credit Agreement  for $125,000,000 dated
                                   as of December 28, 1988 among Registrant
                                   and  certain  banks identified  therein.
                                   (5)

               10(ai)              Note  Purchase  Agreement  dated  as  of
                                   December 31, 1988 between Registrant and
                                   a Rhode Island based insurance/financial
                                   services  company.    A   Note  Purchase
                                   Agreement  in   substantially  identical
                                   form  was  executed  with   seven  other
                                   entities identified in this exhibit. (5) 

               10(aj)              Class   A   Preferred   Stock   Purchase
                                   Agreement dated  as of December  1, 1988
                                   between Registrant and Insurance Company
                                   of North America. (5)

               10(ak)              Class   B   Preferred   Stock   Purchase
                                   Agreement dated as  of December 1,  1988
                                   between  Registrant  and a  Rhode Island
                                   based/insurance/financial       services
                                   company.   A  Class  B  Preferred  Stock
                                   Purchase   Agreement  in   substantially
                                   identical form was  executed with  seven
                                   other   entities   identified  in   this
                                   exhibit. (5)

               10(al)              Pledge  Agreement  dated as  of December
                                   28,  1988  between  Registrant  and  The
                                   First  National  Bank  of   Chicago,  as
                                   Agent. (5)

               10(am)              Surplus Debenture dated  as of  December
                                   28, 1988 in  the amount of  $140,000,000
                                   made by Standard to Registrant. (5)

               10(an)              Warrant Agreement dated  as of  December
                                   29,  1988  between   Registrant  and   a
                                   Connecticut   based  insurance/financial
                                   services company.   A Warrant  Agreement
                                   in  substantially   identical  form  was
                                   executed with seven other entities. (5)

               10(aq)              Registrant's  Defined   Benefit  Pension
                                   Plan,  effective as of  January 1, 1988.
                                   (6)

               10(ar)              Registrant's  Employee   Stock  Purchase
                                   Plan, effective as  of August 25,  1989.
                                   (6)

               10(as)              Registrant's Non-Qualified Stock  Option
                                   Plan. (6)

               10(at)              Exchange  and Amendment  Agreement dated
                                   July 30, 1990 between Registrant and the
                                   holders  of its Class  A Preferred Stock
                                   and its Class B Preferred Stock. (7)

               10(au)              Amendment dated July 30, 1990  to Senior
                                   Loan Agreement among the  Registrant and
                                   certain banks identified therein. (7)

               10(av)              InterCreditor  Agreement dated  June 12,
                                   1991,  among  Investors  Life  Insurance
                                   Company of North America, Investors Life 
                                   Insurance Company of California, Merrill
                                   Lynch Insurance Group, Inc.  and Merrill
                                   Lynch & Co., Inc. (8)

               10(aw)              Note dated June 12,  1991 in the  amount
                                   of  $22.5  million made  by  Family Life
                                   Corporation in favor  of Investors  Life
                                   Insurance Company of North America. (8)

               10(ax)              Note dated June  12, 1991 in  the amount
                                   of  $2.5  million   made  by   Financial
                                   Industries   Corporation  in   favor  of
                                   Investors  Life   Insurance  Company  of
                                   California. (8)

               10(ay)              InterCreditor Agreement  among Investors
                                   Life Insurance Company of North America,
                                   Investors  Life   Insurance  Company  of
                                   California  and  the  Agent   under  the
                                   Credit   Agreement dated  as of June 12,
                                   1991. (8)

               10(az)              Option Agreement by Financial Industries
                                   Corporation in favor  of Investors  Life
                                   Insurance Company of  North America  and
                                   Investors  Life   Insurance  Company  of
                                   California. (8)

               10(aaa)             Hotel Lease Agreement dated as of August
                                   22,   1991    between   Investors   Life
                                   Insurance Company of  North America  and
                                   FIC Realty Services, Inc. (9)

               10(aab)             Management   Agreement   dated   as   of
                                   September 4, 1991 between Investors Life
                                   Insurance Company of  North America  and
                                   FIC Property Management, Inc. (9)

               10(aac)             Amended  and  Restated Credit  Agreement
                                   dated   January   29,  1993   among  the
                                   Registrant and  certain banks identified
                                   therein.   (10) 

               10(aad)             Amended  and  Restated Pledge  Agreement
                                   dated  January  29,  1993   between  the
                                   Registrant  and  the  agent  bank  named
                                   therein.  (10)

               10(aae)             Stock  Option  Agreement dated  March 8,
                                   1986  between  Registrant and  Financial
                                   Industries Corporation. (10)

               10(aaf)             Surplus Debenture dated  as of  November 
                                   13,  1986 in  the amount  of $15,000,000
                                   made by New Standard to Registrant. (10)

               10(aag)             Terms   and  Conditions   of  Employment
                                   Contracts of  James M. Grace,  Eugene E.
                                   Payne  and Joseph  F. Crowe  approved by
                                   Registrant's Board of  Directors on  May
                                   16, 1991.  (10)

               10(aah)             Letter agreement and addendum dated July
                                   23,   1992    between   Investors   Life
                                   Insurance Company of  North America  and
                                   Mr. and Mrs. Theodore A. Fleron.  (10)

               10(aai)             Letter agreement dated October  15, 1992
                                   between  Roy  F.  Mitte  and  Registrant
                                   evidencing surrender and cancellation of
                                   stock options.  (10)

               10(aaj)             Note dated July 30,  1993 in the  amount
                                   of  $30  million  made  by  Family  Life
                                   Corporation in favor  of Investors  Life
                                   Insurance  Company   of  North  America.
                                   (11)

               10(aak)             Note dated July  30, 1993 in the  amount
                                   of  $4.5  million  made  by  Family Life
                                   Insurance Investment Company in favor of
                                   Investors  Life   Insurance  Company  of
                                   North America.  (11)

               10(aal)             Amendment  No.  1  dated July  30,  1993
                                   between  Family   Life  Corporation  and
                                   Investors  Life   Insurance  Company  of
                                   North  America  amending  $22.5  million
                                   note.  (11)

               10(aam)             Cancellation  of Stock  Option Agreement
                                   dated    October   21,    1993   between
                                   Registrant and Roy F. Mitte.  (11)

               10(aan)             Waiver and Amendment Agreement  dated as
                                   of  July 23,  1993 among  the Registrant
                                   and  certain  banks identified  therein.
                                   (12)

               10(aao)             Amendment Agreement dated as of December
                                   20,  1993  among   the  Registrant   and
                                   certain banks identified therein.  (12)

               10(aap)             Amendment  Agreement  dated as  of March
                                   12,  1994  among   the  Registrant   and
                                   certain banks identified therein.  (12) 

               10(aaq)             Amendment Agreement dated as of December
                                   22,  1994  among   the  Registrant   and
                                   certain banks identified therein.  (12)

               10(aar)             Amendment Agreement dated as of February
                                   10,  1995  among   the  Registrant   and
                                   certain banks identified therein.  (12)

               10(aas)             Data  Processing  Agreement dated  as of
                                   November      30,      1994      between
                                   InterContinental Life  Insurance Company
                                   and FIC Computer Services, Inc. (12)

               10(aat)             Data  Processing  Agreement dated  as of
                                   November 30, 1994 between Investors Life
                                   Insurance Company of  North America  and
                                   FIC Computer Services, Inc. (12)

               10(aau)             Data  Processing  Agreement dated  as of
                                   November  30,  1994 between  Family Life
                                   Insurance   Company  and   FIC  Computer
                                   Services, Inc.  (12)

               10(aav)             Lease  Agreement  dated as  of September
                                   30,  1994  between FIC  Realty Services,
                                   Inc.  and  Atrium Beverage  Corporation.
                                   (12)

               10(aaw)             Management   Agreement   dated   as   of
                                   September  30,  1994 between  HCD Austin
                                   Corporation  as  agent  for  FIC  Realty
                                   Services,   Inc.  and   Atrium  Beverage
                                   Corporation.  (12)

               10(aax)             Amendment Agreement dated  as of  August
                                   8, 1995 among the Registrant and certain
                                   banks identified therein.

               10(aay)             Amendment Agreement dated as of December
                                   15,  1995  among   the  Registrant   and
                                   certain banks identified therein.

               10(aaz)             Agreement  of Sale dated as of September
                                   5,  1995  between  Omni  Congress  Joint
                                   venture  as  Buyer  and  Investors  Life
                                   Insurance  Company  of North  America as
                                   Seller,  with  exhibits, amendments  and
                                   assignment.

               21                  Subsidiaries of the Registrant.

               23                  Consent of Price Waterhouse LLP. 


               (1)    Filed with the Registrant's Annual Report on Form 10-
                      K  for  the  fiscal  year  ended  December 31,  1983,
                      Commission File  No. 0-7290, and incorporated  herein
                      by reference.

               (2)    Filed with the Registrant's Registration Statement on
                      Form S-8 (Registration  No. 2085333) and incorporated
                      herein by reference; except Amendment  filed December
                      14,   1988  (item   (iv)),  which   was   filed  with
                      Registrant's Current Report on Form 8-K dated January
                      12, 1989, and  incorporated herein by  reference; and
                      Amendment  filed February  9,  1990, which  was filed
                      with Registrant's Annual  Report on Form 10-K for the
                      fiscal year ended December 31, 1989, and incorporated
                      herein by reference.

               (3)    Filed with the Registrant's Annual Report on Form 10-
                      K  for the  fiscal year ended  December 31,  1984 and
                      incorporated herein by reference.

               (4)    Filed with the Registrant's Annual Report on Form 10-
                      K for  the fiscal year  ended December  31, 1985  and
                      incorporated herein by reference.

               (5)    Filed with Registrant's  Annual Report  on Form  10-K
                      for  the fiscal  year  ended December  31,  1988, and
                      incorporated herein by reference.

               (6)    Filed with  Registrant's Annual Report  on Form  10-K
                      for  the fiscal  year  ended December  31,  1989, and
                      incorporated herein by reference.

               (7)    Filed with  Registrant's Annual  Report on Form  10-K
                      for  the fiscal  year  ended December  31,  1990, and
                      incorporated herein by reference.

               (8)    Filed with Financial Industries Corporation's Current
                      Report  on   Form  8-K  dated  June   25,  1991,  and
                      incorporated herein by reference.

               (9)    Filed  with Registrant's Annual  Report on  Form 10-K
                      for  the fiscal  year  ended December  31,  1991, and
                      incorporated herein by reference.

               (10)   Filed  with Registrant's  Annual Report on  Form 10-K
                      for  the fiscal  year  ended December  31,  1992, and
                      incorporated herein by reference.

               (11)   Filed with  Registrant's Annual  Report on  Form 10-K
                      for  the fiscal  year  ended December  31,  1993, and
                      incorporated herein by reference.

               (12)   Filed with Registrant's  Annual Report  on Form  10-K 
                      for  the fiscal  year  ended December  31,  1994, and
                      incorporated herein by reference.